Can only recommend the basics,
Does the picaxe program in another board?
Did you make the programming lead, very easy to read the pins wrong and make a left hand lead instead of a right hand or visa versa, if so check your lead?
if you are using out0 then this is also part of the programming and should for the purpose of this test and whenever programming be connected to serial out only!, hence the jumper on the prototype boards,
When you say "wiggly" wire i assume you mean the part the person has to run the handle along without touching the wiggly wire, i gather that the handle has say 5volts in it and when you short the handle to the "wiggly" wire you mean a connection and hence an input is recieved.
This should not effect programming,
Kind Regards