The jumping flame was the gas generator exhaust.
You can see that as the bronze-ish coloured smaller cylinder on the side of the engine in this picture of Merlin 1D engines in the factory.
You can see how it changes in size and shape from the Merlin 1C in this image:
This is really obvious on the last Falcon 1, which used a Merlin 1C but was never flown, and recently was moved from storage to the Hawthorne factory, and there is a great shot of the F1 next to the F9 on display.
The Merlin engine burns fuel/oxidizer in a separate combuster, whose output/power is used to run the fuel pump.
Rockets needs gobs and gobs of fuel/oxidizer at rates that are astonishing. The SSME on the Space Shuttle high pressure turbo pump put out 23,260 hp (17.34 MW) of power. That is a lot.
The Merlin has about 1/3 the total thrust of the SSME, but uses denser fuels and a single turbo pump for both fuel and oxidizer but still needs to move a lot of liquids very quickly.
On the Merlin, the exhaust is vented over the side from the gas generator. That is the flame you are seeing.