I am not sure if the LED will cause you problems or not. I personally would remove it as its voltage drop, turn-on current, and diode properties inject unneeded complexities IMHO.
There's no need for a voltage source--the Protoneer board will provide what you need on the probe pin. The other wire on your probe needs to go to a ground pin on the Protoneer board.
Here's a decent video for using bCNC with a probe:
https://www.youtube.com/watch?v=d-CRPRXAR9s. Can't speak for the other gcode sender options available on the Protoneer Raspberry Pi image.
The z-probe function in bCNC works fine, but I prefer to have an automated z-height setting and bit lift-off with only one mouse click, so I use a macro attached to one of the user configurable buttons in bCNC:
g38.2 z-1 F1
g92 z0.25
g91 g0 z0.1
The first line probes until the bit touch the plate. The second line sets the z-height to 0.25in (my touch plate is 0.25in thick/tall; if you use mm in your gcode, enter in mm). The third line lifts the bit 0.1in up, so when the completes the macro, the bit is 0.35in above the surface of the workpiece.
I personally use this touch plate:
http://shoelessdave.com/Vancura.Innovat ... cnc-ef.htm. Not only can it set Z, but it can precisely find a corner; very helpful for some designs and recovering if your cnc gets out of whack. I use the built-in center finding on bCNC. Also, by using a precision milled touch plate, I get much better results on designs that need several bits.
One last lesson taught to me by the school of hard knocks: on a design with multiple bits, always probe the different bits in the same X,Y location for the best repeatability.