Thanks for the files.
The manifest was not the visual micro manifest it was the atmel 8 bit extension but the log is useful and shows the error
System.MissingMethodException: Method not found: ficates.X509ChainStatus> cateInformation()'.
at VSIXInstaller.App.LogSignatureDetails(IExtension extension)
at VSIXInstaller.App.LogExtensionDetails(IExtension extension)
at VSIXInstaller.App.InitializeInstall(Boolean isRepairSupported)
at VSIXInstaller.App.InitializeInstall()
at System.Threading.Tasks.Task.InnerInvoke()
at System.Threading.Tasks.Task.Execute()
Unfortunately, I think the error is some breakage between the visual studio 2015 shell that atmel studio uses and other visual studio 2015 versions. I found the similar error report for the microsoft team services extension and it looks like a bit of a nightmare to fix.
https://social.msdn.microsoft.com/Forums/en-US/d16e2633-cb7d-44bc-b2ad-39f065e4d... It is a problem in the vsix installer where it appears to be trying to use a method to validate a security certificate that is missing and in any case the visual micro .vsix is not signed. So why it would be doing any cert stuff I have no idea.
Installing from within the ide would normally be a safe way to ensure the correct vsix installer is being used. atmel 7 uses an older vsixinstaller.exe from visual studio 2010 era.
It would be useful if the log showed which vsixinstaller.exe is being run.
Can you look in control panel add or remove programs. See if there are any other visual studio entries? especially visual studio shell?
If you can find where the atmel 7 vsixinstaller.exe is located you might be able to run it via command line to install a local copy of the visual micro .vsix extension file.
If you don't use the atmel hardware debugger(s) you could also try vs2017 community. it's free and has a different installer.
Sorry I can't be more help.