x and y are both at 5 V regardless of the state of z
z is at 5 V regardless of the states of x and y
To test if the LED is functional, set all switches to 5 V. If the LED remains off then you may need to check your simulation settings such as Digital simulation mode. For example the default mode is 3.3 V logic level. You may also want to lower the resistance in series with the LED (e.g., 200 Ω, 300 Ω).