Photo & Motion sensor issue

Other Hardware LEDs and Multiplexing
2

your fading code is blocking, so there is little point in trying to make the 1ms interval non blocking..

just make the full thing blocking

const unsigned long interval = 1;  //amount of time the leds will stay up in millis

•••

// in loop, upon detection

for (int i = 0; i < 256; i++) {
  analogWrite(LEDPIN, i);
  delay(17);
}

delay(interval);

for (int i = 255; i >= 0; i--) {
  analogWrite(LEDPIN, i);
  delay(17);
}

if you want non blocking code, then use a state machine. Here is a small introduction to the topic: Yet another Finite State Machine introduction