I just got a TinyLily USB to learn to use and I have trouble with it off the bat. When connecting to the computer it will connect for a second then disconnect for a second and repeats this constantly. It's not possible to see if the drivers installed or try to upload a sketch to it.
Anyone else have this problem? Is it a bad board?
I just had the same problem and found this tutorial to get around it: Use of LilyTiny - a clone of Lilypad - qsun.me
In a nutshell, you need to:
Cut and paste this url into your preferences -> 'Additional Boards Manager URLs' area: http://digistump.com/package_digistump_index.json
Specify the board as a 'Digispark Default' 16.5 mhz'
Without plugging in the LilyTiny, upload the code. When the IDE props you to plug it in, only then, plug in the USB to the port you've specified.
Now it should work!