Once you have completed level 2 you will be sent back to the hub, follow the green ghost studs for the story progression.
Cross the bridge until you are on the street corner in below image:
Now select Harley Quinn by holding the
button, scroll down to the first character on row 4 and select.
Once on street corner press and hold
until she brings out the boom box above her head, which will then break into “Hit me with your best shot”. You can release as it moves onto her left arm/shoulder.
As you can see in the below image:
There are 11 civilians dancing which took literally a few seconds to gather up, as they are naturally walking or cross the street.
As soon as you have your 5 dancing pop achievement unlocked.
Pleased see my video clip of plenty of characters dancing and best area to use.