ATMega328 Bootloader Not Working

steven6282:
I've tried that arduinoisp sketch that you linked as well now (which doesn't have very good instructions by the way, says it has 8mhz output on pin 9 but no instructions on how to use it. Does it plug into one of the external crystal oscillator pins on the 328 or somewhere else?).

I believe you connect Pin 9 to XTAL1 which is pin 9 on the 28-pin DIP. Note that pin 9 is the 9th pin down the left side when the notch is facing up.