Help with attiny 85

It sounds like you're close.

You need to have loaded the ArduinoISP sketch onto the Uno first (ie without the cap installed) then, after you connect your ATTiny and the cap, when you upload the blinky sketch it will be passed through to the ATTiny...but you do need to have ArduinoISP loaded first.

If you're using the unchanged IDE 1.0 ArduinoISP from the examples folder it had a line that caused issues on my Uno (and I think all?)

void setup() {
  Serial.begin(19200);
...

Changing that to Serial.begin(9600);I think was necessary if I remember correctly. Certainly that's a difference between the version I run routinely, and the standard example sketch. I may have made more changes but I don't appear to have commented the changes at the time.

Hope this helps,
Geoff