rlew24: Can someone see if this would work for what I am trying to do?
You need to step back a bit.
Dont try to do 'complex' stuff until you have the basics working.
Ignore sensore readings completly.
Write a program that turns on and off the LED (or is is multiple LEDs ?).
You keep referring to producing different colours without explaining the LEDs you are actually using. The original PICAXE code suggests 2 LEDs, one green, one red. Yet you then suggest your using a 'tri-colour' LED. You will get far better answers if you give a full explanation of the parts you are trying to use.