seperate ATmega 2560 - turn on a single LED - troubleshooting
You are saying that the LED lights if you write LOW to it.


  I need to pull the output pin to LOW to make the LED work 


That's exactly what you expect.



Since the other end of the LED is wired to +5 V, then you need to drive the pin low to have a voltage difference over the LED, and for it to light.




  I double checked the Atmega and it is a ATmega2560V, which is rated for 8Mhz. Any chance to fix this with the existing PCB? Change the Fuses to use the internal clock? 


Yes, I suggest you do that.

Look at Engbedded Atmel AVR® Fuse Calculator to see what to set them to. I suggest the internal 8 MHz oscillator.