Need help DC biasing an AC source
You have connected the output of your simulated CT to GND. This is not how the original circuit is wired.

One side of the CT output in the original circuit is connected to the bias point, the other side is the input to the Arduino.

Connect the capacitor across the bias resistor, and one side of the CT output to the Arduino A/D input.

https://www.circuitlab.com/circuit/595a448d3mdx/updated-circuit/

If you are trying to measure current, then don't forget the burden resistor. If you are trying to measure the voltage, then use a normal transformer with a 3V output.

Never make measurements directly from the mains - remember mains can be lethal! Take care in what you are doing.