Pulsed High Power LED
If you used an ordinary LED for your your first test it's probably gone to LED heaven: you only have 1\$\Omega\$ current limiting resistor, that's good for 12A (if your power supply can deliver that). Now if the LED broke shorting that's also the current through the FET. It has a very low \$R_{DS(ON)}\$, so it shouldn't get hot, even at 12A. That probably means the gate voltage isn't high enough. Increase the supply voltage of your driver.  

Try again with a higher value for R1, like 470\$\Omega\$. That should get you 25mA. Good enough for an ordinary LED.  

BTW, D1 is not necessary. Get rid of it.  

edit
On second thought it seems unlikely to me that an indicator LED, when broken, will conduct 12A. The thin bonding wire from the anode post to the die will break and leave an interruption. Then the next suspect is D1. If you mounted it wrong it would explain the high current, and why the LED doesn't light. One more reason to remove D1.