.cap file is blank
No it's not... try opening the Level1 layout
Anyway, the problem is you're trying to use physics collisions, but you're not telling the player to move using physics movement. You're telling the player to move using set pixel amounts. Physics doesn't work that way.
If you are using physics, you can only tell physics objects to move using force or acceleration in the physics tab of the actions for the object. You can only tell the physics object to rotate using torque or angular velocity.
You cannot tell a physics object to "rotate n degrees" or "move n pixels." You're doing it wrong.
Basically it works like this: The Physics behavior is a simulation. It runs all the collisions in the behavior itself. It's a totally separate thing from 8Direction or Platform interacting with solid objects. Physics doesn't care if an object is checked "Solid."
Physics objects only collide with other physics objects, period.
If you want physics objects to collide then you need the physics engine to do the work for you. If you tell the sprite to "move n pixels" then it totally skips the physics engine and move the pixels like you asked. But the physics engine doesn't know you just move the sprite. It doesn't know you just intersected with a solid. Moving those pixels is not part of it's simulation. The physics engine still thinks the sprite is sleeping away perfectly still where it started off.
Anyway, long story short: Physics and regular pixel movement (including other behaviors) don't mix. Physics only works with physics.