Cyclone III dev. board works inverse logic

I guess you connected the fpga output to LED cathode and Vcc to anode, so it lights up when output is low.

The simplest solution is inverting the and gate result inside fpga.

Otherwise you should connect the anode to the output and the cathode to ground, but I think this is not possible on your board. Moreover the common practice is driving loads with a current sink (then in an inverted way) rather than a current source, since output stages work more efficiently.