what did i DO

Connect earth to cathode side of LED. Add resistor in series with LED to limit current through LED, a 10 Ohm will suit.

And you'll need to increase AC to get LED to light, perhaps to 4V.

Like Robert said, youre gonna want a current limiting resistor in series with the LED. This is sometimes called a ballast resistor. And as he also said, 2V is not enough voltage. This is because small rectifier diodes dont start conducting until the voltage across them reaches about 0.7V, and depending on color, LEDs need between 1.2 and 4V to conduct. So if we consider the 4-diode full-wave rectifier you have here we see that there is always 2 series diodes conducting during either half of the cycle, plus your LED. So in order to have all your diodes fully conduct you need at least 0.7V+0.7V+2V=3.4V. If your supply exceeds that voltage the ballast resistor drops the difference.