There were many people gathered there. There were many people gathering there.
which is grammatically correct?What about there were gathered many people?

Question

Answer

They're both correct, but they have a slightly different meaning.

GATHERED means that people were already there, there were no new arrivals to the gathering.

GATHERING means that people were going there, and more and more were arriving to form a gathering.

Answer

gathered = 聚集
gathering = 在聚集中
That is the difference in meaning of the two sentences. Your third sentence is totally wrong.