The programming error would suggest that the board is resetting, possibly due to an overcurrent event when it’s lighting up the LEDs like that.
Previously, you said that you were able to program it. If it can’t be programmed, the “CPU” is probably also not in a state where it can correctly light the LED display. You should reload the peggy2_minimal sketch to have a known-good state before going further. If necessary, gently remove the LED driver chips (U2, U3) so that it will not drive the LED display, so that you can reprogram it.
