dasun:
Please see this discussion
http://arduino.cc/forum/index.php/topic,28223.0.html
I am afraid that the failed loopback test points to the USB2TTL microcontroller, in this case the 16u2 not the 328/Bootloader. The only thing comparable is to plug the USB in and reset the Mega16u2 but shorting the Reset to Ground on the 16u2 ICSP header:
But I am suspecting a re-flashing of the 16u2 maybe in order.