Thanks ALL for the insightful input.
Since all has mostly the same question back to me, so I will consolidate this into one reply.
(1) Good to know that connecting a probe to the xtal is expected/likely to collapse the oscillation and it is not me making a dumb mistake or equipment issue. I tried that before with my 32KHz crystal for the DS1307 clock I made and I could not measure that either. So I wanted to learn from the pros here to make sure that was not something obvious I missed.
(Mr 22swg) Yeah, I use the frequency counter with my DMM... both my scope and DMM has frequency counter function.
(2) Good that I posted here and you folks mentioned a ceramic resonator. The metal can crystal just exactly like the 16MHz crystals I get from Tayda - and I assumed that is the ATMega's clock.
When DannyF said "So you have either an extremely bad crystal or the mcu isn't running on a crystal at all." I said to myself "no way, there is only one place for clock ticks to come..." Then I remembered the schematic shows Atmega16U2 also has a 16MHz crystal.
So, I went back for another much more careful look. The crystal I have been planning on replacing (and attempting to measure) is actually the 16U2's clock and not the 328's clock.
Along pin9 and pin10 of the ATMega328 is a tiny (about 2.5mm x 1mm) metal-looking container 6pins SMD with trace going to 1M resister in parallel then pin9 and 10 of the 328. No visible capacitor anywhere near there. So it must be an oscillator, or a ceramic resonator, or some sort of combined setup (no capacitor, 6 pin from this SMD) rather than just a crystal.
Given I am not even sure if it is a crystal, and is looking more like a ceramic resonator, replacing that is out.
Good that I posted here for advice, I was gearing up to replace the crystal I saw and stupidly assume that is the 328's crystal... That would have been a dumb thing to have done. Replacing the 16U2's ticker would have done nothing.
Thanks again!
Rick