As I have stated the "sketch" operates then the built in LED starts flashing faster than its supposed to, then the TX and RX LEDs start flashing at the same time, after that the LEDs stop flashing. But The arduino on LED stays on. No errors in the "output".
When you upload the standard example sketches such as 'blink', and your modified sketch that simply turns the LED off, does each sketch initially do what you expect for that sketch? In other words, have you proven beyond any possible doubt that you are actually uploading and running the sketches that you think you are?
How long does the sketch run as expected before you see those other symptoms? What is connected to the Arduino - list absolutely everything, including the USB cable (if you have one) and whatever is connected to the far end of it. If it's connected to a PC, do you have any mobile phone manager applications or other media manager applications installed on the PC? Some of these routinely scan serial ports looking for connected devices, and might be upsetting the Arduino.