David Rounds, that excellent actor of multiple awards and talents, has turned up in a freaky Off Broadway musical about a little Southern boy of the depression era who becomes possessed by the ghost of a vengeful vaudeville midget. In ''Herringbone,'' at Playwrights Horizons, Mr. Rounds populates the entire cast: the boy himself, his parents, the midget's one-time partner, and several other characters. The star also provides the voice of the ghost, impersonates a vaudeville frog and chicken, and sings and dances jauntily.In its own bizarre and surrealistic way, ''Herringbone'' (named for its hero's suit) has been cleverly put together by librettist Tom Cole, with matching songs by composer-accompanist Skip Lennon and lyricist Ellen Fitzhugh. But the conceit wears thin as the anecdote extends. In Act II, the dark humor is overtaken by a rather sick joke. Since the plot is never resolved, the show merely comes to an inconclusive stop with Herringbone's reprise of his title song. Nevertheless, Mr. Rounds's versatility is amazing.The cabaret-style, occasionally campy performance was staged by Ben Levit, with Theodore Pappas attending to the musical numbers. The production was designed by Christopher Nowack (setting), Karen Matthews (costumes), and Frances Aronson (lighting).