AVR ATmega644p: can't clear OC0A pin on CTC mode
You might have burned something around the MCU output. 

You should always read thru the datasheet. All of the electronic devices have a maximum operating range. For your MCU this is explained on page 316, a table named: Absolute maximum ratings. Here you will find a DC Current per I/O Pin which tells you the upper limit of how much one I/O pin can source/sink current. Generally you wouldn't want more than 20mA per pin.

You said you're driving the LED directly from the MCU pin thru 27Ohm resistor. Even if you're powering the MCU from 3.3V and the voltage across the LED is 1.3V, the current comes out to be around 70mA which is way above the upper limit (sure you're driving it with PWM but you should always assume the worst case scenario).

So what I would recommend is to first try driving the LED via transistor, there are bunch of tutorials out there how to. If that doesnt work, I would also try to replace the MCU.