Yes, it is possible the transistor went bad. When I tested it again by connecting the 5VDC PSU leads to the transistor and common ground, it blew an LED that was in the circuit before the transistor. Going "reverse", it was the transistor, then a 230 Ohm resistor, then an LED and the positive of the LED was connected to nothing. I put the 5vdc psu lead to the base of the transistor and the psu gnd to the common gnd and the LED blew out loudly. POP! Odd?
Meh, I should have been more specific. Sorry for that. When I said "directly", of course I didn't mean that you should connect the base actually directly to +5V. It was "directly" in terms of controlling it from a known +5V signal, to rule out any posibility of the signal not being properly delivered by the arduino.
If you connected the base to +5V without a resistor between the base and +5V, then of course the transistor would fry very quickly, as there wouldn't be anything to limit current flowing via the base-emitter p-n junction. Otherwise, no idea. Regarding the LED, it's hard to tell what could have happened without a schematic.