* I saw I was using a 1K pot and not a 10K pot, keep in mind the 1K pot gave perfect results on the breadboard. So I changed to a 10K pot with the same result.
* One website mentioned a similar result could be due to the micro-controller and the LCD being out of sync, and jamming the reset button a few times will get them back in sync. Tried that for about 5 min and still had the same result.
* Another website mentioned that some LCD's may take a few milliseconds too long to power up, and miss the LCD initialization from the micro-controller, adding a delay at the start of the sketch before the initialization will sort you out. Did that, made the LED blink a few times on and off before calling "lcd.begin(16, 2);". Still same effect.
* I noticed the L7805CV starts getting really blistering hot when you have the LCD and the Micro-controller plugged in and started. If you run only the LCD or Micro-controller the L7805CV remains very cool to touch. This means to me I have some kind of short circuit, which I don't see.
My board is built like the schematic.