Delete (or edit) your preferences.txt file - it most likely has your sketchbook folder set to your home directory.
You may find it in ~/.arduino15 for the "real" Arduino IDE, or in (I think) ~/.arduino for the arduino.org one.
Unless you have a specific reason for wanting to run 1.8.0, which is actually 1.0.6 re-numbered, you should be using the version ...
We can't tell you the "best" method. It depends on too many details we don't have.
Here are some options:
A reed switch at the bottom of the hole and a magnet on the peg.
A photo sensor at the back of the hole -- the peg blocks the light.
As you suggest, a switch at the side of hole.
Use contrasting colors on the wall and the pegs and detect the pegs ...
The default preferences.txt file in IDE installation has this setting. It is not read from the boards package configuration files.
The programmer key in preferences.txt contains the last selected programmer. The default preferences.txt in lib folder in IDE installation has programmer = arduino:avrispmkii. It is used if preferences.txt in Arduino15 folder ...
Delete the Documents -> Arduino -> Libraries to remove all your libraries.
Delete the User -> AppData -> Local -> Arduino15 folder to remove all the preferences.
Uninstall Arduino IDE.
Install a fresh one.
Per my comment above, the drivers are not installed when using the Arduino editor from an extracted zip file. If you are feeling adventurous, they are located in the /drivers folder and you can install them manually, there are plenty of instructions elsewhere on the internet on how to do that.
My recommendation would be to just download and run the ...