Looks like your getting a bit confused, you don't move the ASP code outside the ASP blocks, just the link to the include file.
Lets start again.
1. Make sure the file you are incerting this in has an .asp extension.
2. At the top of the page outside the ASP block place in:-
<!-- include the Web Wiz CAPTCHA form processing --> <!-- #include file="CAPTCHA/CAPTCHA_process_form.asp" -->
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3. Underneath this in an ASP block place the follwoing:-
<% If blnCAPTCHAcodeCorrect = True Then Response.Write(" CAPTCHA code is correct") ElseIf blnCAPTCHAcodeCorrect = False Then Response.Write(" CAPTCHA code is NOT correct") End If %>
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