I also tried reading the fusebits with Khazama and the results is the same: nomcommunication with the 168, like it is not functional or the connections are faulted.
Curious thing: last week I was working with another Atmega168 and, suddenly, I received the same error. I assumed that I burnt the chip and threw it away, but, considering that I get the same error weith a new and identical chip, it makes me wonder. What could be the problem?
avrdude: initialization failed, rc=-1 Double check connections and try again, or use -F to override this check.