Dear Eric

I have not connected the LED directly across VCC and Port pin.
I am sorry for miscommunication.LEt me explain clearly what I have done so far.

First experiment :

I used 8 LED's POsitive connected to 8 port pins and negative grounded.The LEDs were ON when the pin was on HIgh but the volatge at the pins were only 1.7 volts.

Second experiment:

As instructed I wanted to test with reverse polarity .So I reversed the diodes and connected negative to pins and positive to VCC.Inbetween I did insert 5Kohms resistor.BUt since it was diffciult to inser in the bread board in between led and vcc I tried with only two leds bit 0 and bit 4.and inserted two resitors there.
I removed the remaining leds from the circuit.
As the power was ON the leds were ON for sometime and then they went off.(i dont know why?)
then I Gave an input such that bit 0 and bit 4 go high.
then tried repeating manytimes switched the power on and off ..changed many inputs and then finally the leds behaved properly ..they were glowing when pin was low and were off when the pin went high.
BUt since I did not get consistent pattern intially I was doubtful so I measured the output voltage of each pin directly at the pin using multimeter and was conviced of 4.5 V..But sometimes i got 2.7 volts I think that might me due to the multimeter lead touching the pin adjacent to gnd pin .

I will redo the test tomorrow and also connect all 8 leds with resistors and update on the outcome.
hope 5K ohm resitor should not be a problem.(i did read the eprevious post on estimating the resitance ..but i did not understand ..I will read it again:)-)

Thanks