Well let's not throw it out yet. When you try to upload to the board in the usual way, what happens exactly? Can you go into "verbose upload" mode and post what you see?
Bear in mind you can program it, since the main chip works, either through the ICSP interface or through the serial interface (as it has a bootloader) if you got an FTDI cable.
What ought to work is to leave those wires connected, upload the ArduinoISP sketch to the other board, and then use the ArduinoISP method of uploading. That totally bypasses the 8U (or is it 16U) chip.
Also, does the 8U chip have its own ICSP header, like the new Unos do?