Arduino Nano and Xbee

I have an Arduino Nano and the Gravitech Arduino Nano Xbee shield. I have two series 1 Xbees. One is connected to my Mac by USB via an Xbee explorer. The other is connected to the Nano via the above mentioned shield. The two are communicating with each other as I can send a command from the Mac using CoolTerm and it is received by the nano and then the nano replies and it is received by the terminal. However, I have not been able to upload firmware OTA. I have tried various baud rates but I keep getting a programmer error using the Arduino IDE whenever I try to load a sketch.

Has anyone had success with OTA firmware updates using a Mac, two Xbees and the Arduino Nano Xbee shield? If yes, what is your secret!?!?

Thanks

I tried the LadyAda post related to the Arduino Fio, but that still didn't work. Any other ideas?