Does it think the mini is has a ATmega 168?
That isn't the problem. AVRDUDE isn't reaching the microcontroller. You could have a Motorola 68000 processor on the other end and the symptom would be the same.
avrdude: ser_open(): setting dtr
Looks like AVRDUDE is getting stuck in the kernel driver. I can think of two things to try...
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Ensure you are using the latest drivers for the "mini USB extension adapter"
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Different USB cable