Connections:

LED Anode to BS2 Pin 1
LED Cathode to resistor to ground

Button to +5
Button to BS2 Pin 0.  Also resistor from Pin 0 to ground

' {$STAMP BS2}
' {$PBASIC 2.5}

PB  VAR BIT
I   VAR WORD

PB = 0

WAIT_ON:
  PB = IN0                      ' Button to PB variable
  IF PB = 0 THEN WAIT_ON        ' wait for button press
  HIGH 1                        ' turn LED on
  FOR I = 0 TO 500 STEP 1       ' 5 second loop
    PAUSE(10)                   ' 10 ms delay
    IF IN0 = 0 THEN PB = 0      ' look for button release
  NEXT                          ' repeat 500 times

  LOW 1                         ' LED off
WAIT_REL:
  PB = IN0                      ' button to var
  IF PB = 1 THEN WAIT_REL       ' is button released?
  GOTO WAIT_ON                  ' do it again

  END