xl97:
correct?
Spot on. 
xl97:
I flash Duemilanove with the Arduino as ISP sketch.. ...wire up board..
make sure com port is right... choose - Arduino Pro/Pro-Mini @+3.3v & 8MHz entry from BOARDS menu..
and then choose BURN BOOTLOADER..
This will also work. However you'll need to remove your chip from the 16MHz jig and install it in the 8MHz circuit before you can test it (or create yet another new entry in boards.txt).