ok problem solved! Thanks for the advices.

I've checked the voltages and sure enough, there's 0V across the live and neutral wire coming to the board. A trip to the hardware store then replaced the cable from the panel to the power point (my cable is not under the ground) is all it takes.

But one thing I don't understand, why when tested using a test pen, the diode turned on?

because the test pen is just showing potential difference between you and the live ac.

human body has parasitic capacitance that allows alternating current to go through the body.