Hi Shane,
The Peggy2Serial library is an Arduino *library*. You need to install it, not open it from within Arduino.
See here for how to install Arduino libraries:
http://arduino.cc/en/Guide/Libraries
As for the behavior of your Peggy, it’s clear that one of your columns isn’t working, so check the soldering at the LED driver chips, base resistors, and transistors.
As for the rows that are not lit, that should be expected until you reprogram it with an example program from the correct library.
