Blink Code ATmega2560 not working in Proteus
You have your LED connected to the wrong pin.
The Arduino mapping does not follow physical pin numbers.

Either change your code to use Digital Pin 16 (which is where you are currently connected), or move your LED over to physical pin 26 (which is Digital Pin 13).
I also don't see Pin 99 (GND) connected anywhere on your schematic... And it is also missing a number of VCC connections and GND pins. I'm not familiar with Proteus so I'm not sure why these pins are missing, but it seems like that would be an important part to have.