Using Atmega328 on it's own doesn't work (no arduino board)

If you have battery connected direct to VCC/GND, then it effectively acts like a Big capacitor.

As stated, you need to set fuses to run from internal oscillator.
If you can make a cable to connect to the ICSP header pins, MISO, MOSI, SCK, RESET, GND, POWER pins you can program it directly using an AVR Programmer, such as
http://www.nkcelectronics.com/pocket-avr-programmer.html
or comparable from where you are, and you will then have a tool for your next project as well.