The problem is because you have the Pencil Tool selected, not the Brush Tool. I can see it in the tool bar in your screenshot (see enlargement below). The Pencil Tool can only draw hard-edged pixels. Select the Brush Tool instead.
I would like to show my version.
The result is almost like the image sample (I think).
Using Photoshop CC.
1- Duplicate the text several times. Leave a master copy on top of the layer stack.
2- Select the copy layers and make a Smart Object. Change the Smart Layer to Darker Mode.
3- Filter > Blur > Motion Blur. Angle 0, distance 8.
4- Filter > Sharpen > ...
If you want to trash some letters of a normal clean text it's easiest in Illustrator:
A word is written and Type > Create Outlines is applied. The N will be splitted, the red line is drawn for it
The red line is selected and Object > Path > Divide objects below is applied, the loose part is moved apart and new outlines are drawn with the pen. The drawn ...
The image you posted appears to have been done manually. You can achieve an effect similar to this if you have a scanner. For this example, I printed a sample image of regular 3D text. Then I placed the print onto my scanner at an angle, and shifted it three times as the scanner sensor passed by. I would imagine that if you spent some time with it, you could ...
Here's one method
Open an image in Photoshop - preferably one that is high in contrast with a dark background and dramatic lighting, then convert it to greyscale mode
Reduce the image size to approx 300px in height
Create a 1px line pattern, and fill a new layer above with the pattern
Find a glitchy texture on google images, something like this one
For that specific effect that you highlighted, it's difficult to tell what was done to it. But there's a method that could get you close perhaps.
Duplicate the artwork so you have two layers, each with an Ocean Ripple filter but with different settings for each layer, then the top layer set to Linear Dodge, or another blending mode.
This has at least 3 layers when one makes it. In the bottom there's a quite regular dot pattern, like a photo of bubble wrap plastics.
In the middle there's a wave pattern where the RGB channel contents are shifted apart like in this older case: How can I recreate this holographic iridescent water effect in Photoshop?
On top there's a transparent yellowish ...
To get that effect I choose a slight different approach than Danielillo.
I first create a copy of the background layer and use the "Color Halftone" filter on that. After that I use "Gaussian Blur" at 1 pixel to soften the pattern. Set the layer blend to "Lighter color".
Then make a copy of that layer and use "Liquify" filter and use the twirl tool to ...
You seem to have set the alignment to "fixed" shown circled in green below. Are you sure that's what you want? Also you have set the clone to source to a pattern. Are you sure you want this?
Perhaps try using the alignment setting "none" or one of the other options. If you set it to "fixed" the clone source is reset to the same point for each step of the ...