I'm having the same problem, I got an Arduino with ATMega328, compiled the same software, fixed the capital V to make it compile, all that stuff and I have it connected straight to the PWM Timer1 output of another AVR (ATMega168 on my breadboard running a fan controller program I'm working on) and it isn't outputting any frequency. Is there any reason that the program only works on the 168 and not the 328 (last I checked they're identical chips except one has more memory)?
EDIT: Easy fix, whoever coded the frequency counter library threw in a check that only compiles the code if the target is an ATMega168, delete those two lines (the #if and #endif following it) in the FreqCounter.cpp file, save it, and then re-compile your Arduino code. it works great!