If i recall correctly, one of the fuses(or type of fuses.) is an internal oscilator, which eliminates the need to solder/attach a 16 mhz crystal oscilator to your circuit if you were to use an atmega chip out of your arduino board(like,in a breadboard) you could use the fuse for the internal oscilator to further minimize your circuit.

This information is not relevant if you use your atmega chip inside your arduino itself i believe,since this board has an oscilator on it, it's just for when you want to make multiple copies of your arduino,minimize the space it uses and while doing this,eliminate the need for the oscilator which saves on money.

Yeah i followed sir nickity's instructions and it worked out, the STK not in sync is something with usb, sometime you just have to plug the arduino out and back in to solve that. if i ever run into this again i'll come back to this post and try your method,fateth, thank you for your response! (even though it was a bit late, but still,thanks!)

Last thing i did was change the board to atmega8 and tried bootloading with arduinoa s isp, so i got the arduinoisp on my arduino, now i get this error

avrdude: stk500_getsync(): not in sync: resp=0x00

I'm taking a break. tomorrow another day.

I decided to just "do it", i get this error:

avrdude: Expected signature for ATMEGA328P is 1E 95 0F
         Double check chip, or use -F to override this check.

Can i change the program to work with atmega8-pu16 by changing settings in rpeferences like some other people said? how do i do this? No clue.

A friend of mine had bought several atmega8-16PU's , I myself have an arduino uno, with atmega328PU on it, I've been looking at the tutorial "arduinotobreadboard" http://arduino.cc/en/Tutorial/ArduinoToBreadboard

Now here's my question. if i want to boatload this atmega8-pu16, do i leave my original atmega328 in the arduino? the tutorial says i have to remove it when i upload a program to the atmega8 on the breadboard.But i'm not sure if i have to remove the atmega from my arduino when i'm bootloading.

I'm just a bit confused on how exactly to use the arduino as bootloader, do i put the arduinoisp software on the original arduino, and let it be powered by usb,which in turn will boatload the other atmega?
Or do i remove the original atmega328 alltogether and bootload the atmega8 on the breadboard using the arduino board itself without it's microprocessor?

Thanks in advance,
Romninja