If you aren't putting a 100nF capacitor between the FTDI's DTR and the ATmega328's RESET pin, you don't have auto reset. You'll need to reset manually (and leave DTR disconnected).
On the FTDI device its called RTS so disconnect that and use the reset switch that came with the kit?
DO I need the Caps like they show on the diagram for the crystal? That would not be the reason for the sync error would it?
When do you reset manually before and after the successful upload of the sketch?