The problem is fixed. Why it works I do not know. I decided that the serial code, whether hard or soft, must be interfering with the boot code. I added a half second delay right at the beginning of the code and now it works from reset or power on reset.
I do not know how Optiboot works; though, I do know how Tinyboot for the PIC works. After reset,the boot waits for serial download code for a second or so and if there is none it jumps to the code already in memory.