http://i.stack.imgur.com/XvHm5.png
When I click the On button it should start spamming 1\'s across the JTextField. Instead The entire GUI freezes, including the close bu
You have an infinite loop. The state of the toggle button is never changed after being set to true.
Java's UI (and all UI I've worked with) is driven by a single thread. User input is fed back to you on this single thread. Rendering is also done on this single thread.
The reason the textfield is never updated is the UI thread is never getting to render the screen again, as its tied up in your infinite loop.
Yes, you need to put this code in a separate thread, and start it when the toggle button becomes selected. Then, you need to update the textfield from this separate thread. Look into SwingWorker.