For SCORM 1.2 Xerte will return the state 'passed' to the LMS if the LO is completed and the endscore equals or is higher than the set passing score.
Because (especially) Scorm 1.2 does not do a good job and distiguishing between completed and passed/failed, most LMS's have a lot of ways to influence the behaviour of passed/failed and/or completion. So, I would look at the LMS setiings first. Also, test the LO in the scorm.com scorm test player, as this will show you in detail what is sent to the LMS.