Why isn't software USB/TTL on ATmega328p working?
You have powered the AVR with 5V from USB so it uses 5V IO voltage. USB data pins are 3.3V signals and your schematics have nothing to limit the voltage except the 68R seris resistors to limit the current to 25mA so unplug the device before it damages your PC.
If the USB port of PC is not yet damaged, there are other reasons as well. The fuse bits must be set to use external crystal, and the crystal speed must match what the programmed binary expects.