user72167: Updated question.  The original question was based on using 'Upload' from the Arduino IDE, instead of 'Upload Using Programmer' under 'Sketch'.  The problem in getting the Atmel-ICE to work with Arduino IDE appears now to be one of incorrect ICE drivers loaded when I installed Atmel Studio. 
Arduino requires libusb-win drivers, which can be checked with Zadig.   Available here: https://zadig.akeo.ie/
This problem was 99% solved (with help) by selecting  and the libusb-win32 driver using Zadig.   I say 99% solved, because my program now loads and runs! , but I do get the red 'X' there as the WCID status.
Apologies if this amendment to the original question is not in the correct context, this is new to me.   Thank You.
Jaco

user68945: Hello The 328 "PB" has major issues with running external clocks...(yes I have first hand experience with this PB model)... Try switching to the internal oscillator as I can testify first hand the the external clocks on the PB don't work correctly. They tend to sell the PB a few bucks cheaper because you will only buy them once and only once when you find out how bad the external crystal clock driver is. If you look at the latest datasheet for the PB they try and talk their way out of the bad driver by explaining how you need to match capacitors with the following snippet. I call BS as the 328p never needed such precision on it Xtal1 & 2 pins to run but to be fair they PB is meant to be low power.
This Crystal Oscillator is a low power oscillator, with reduced voltage swing on the XTAL2 output. It gives
the lowest power consumption, but is not capable of driving other clock inputs, and may be more
susceptible to noise in noisy environments.
The crystal should be connected as described in Clock Source Connections. When selecting crystals,
load capacitance must be taken into consideration. The capacitance (Ce+Ci) needed at each TOSC pin
can be calculated by using:
�� + �� = 2�� − ��
where:
• Ce - is optional external capacitors. (= C1, C2 as shown in Figure 11-2)
• Ci - is the pin capacitance in Table 11-3.
• CL - is the load capacitance specified by the crystal vendor.
• CS - is the total stray capacitance for one XTAL pin.
Table 11-

72167: <p>Updated question.  The original question was based on using 'Upload' from the Arduino IDE, instead of 'Upload Using Programmer' under 'Sketch'.  The problem in getting the Atmel-ICE to work with Arduino IDE appears now to be one of incorrect ICE drivers loaded when I installed Atmel Studio. <a href="https://i.stack.imgur.com/4CAWp.jpg" rel="nofollow noreferrer"><img src="https://i.stack.imgur.com/4CAWp.jpg" alt="Device Manager conflict" /></a></p>
<p>Arduino requires libusb-win drivers, which can be checked with Zadig.   Available here: <a href="https://zadig.akeo.ie/" rel="nofollow noreferrer">https://zadig.akeo.ie/</a></p>
<p>This problem was 99% solved (with help) by selecting <a href="https://i.stack.imgur.com/SCZCk.jpg" rel="nofollow noreferrer"><img src="https://i.stack.imgur.com/SCZCk.jpg" alt="Install WCID driver" /></a> and the libusb-win32 driver using Zadig.   I say 99% solved, because <em>my program now loads and runs!</em> , but I do get the red 'X' there as the WCID status.</p>
<p>Apologies if this amendment to the original question is not in the correct context, this is new to me.   Thank You.
Jaco</p>
 68945: <p>Hello The 328 &quot;PB&quot; has major issues with running external clocks...(yes I have first hand experience with this PB model)... Try switching to the internal oscillator as I can testify first hand the the external clocks on the PB don't work correctly. They tend to sell the PB a few bucks cheaper because you will only buy them once and only once when you find out how bad the external crystal clock driver is. If you look at the latest datasheet for the PB they try and talk their way out of the bad driver by explaining how you need to match capacitors with the following snippet. I call BS as the 328p never needed such precision on it Xtal1 &amp; 2 pins to run but to be fair they PB is meant to be low power.</p>
<p>This Crystal Oscillator is a low power oscillator, with reduced voltage swing on the XTAL2 output. It gives
the lowest power consumption, but is not capable of driving other clock inputs, and may be <strong>more
susceptible to noise in noisy environments.</strong>
The crystal should be connected as described in Clock Source Connections. When selecting crystals,
load capacitance must be taken into consideration. The capacitance (Ce+Ci) needed at each TOSC pin
can be calculated by using:
�� + �� = 2�� − ��
where:
• Ce - is optional external capacitors. (= C1, C2 as shown in Figure 11-2)
• Ci - is the pin capacitance in Table 11-3.
• CL - is the load capacitance specified by the crystal vendor.
• CS - is the total stray capacitance for one XTAL pin.
Table 11-</p>
