Step one seems simple, I should setup a pin as an output and write it low. For step two should I wire Pin 8 directly to digital pin? If so are there steps that I need to take to protect the arduino from getting fried?
I'm going to double check all the connections but so far the CTS is not going High.Any thoughts?
Make sure you fully understand how RS232 is connected and the relationship between pin numbers and signals at either side of the connection. Note that the connections are (usually) not made directly between the numbered pins on each connector but are crossed in pairs (txd and rxd are crossed, and so on).
I don't believe you need to actually send or receive anything over the serial port at this stage - you're testing the signaling preamble that precedes the data transfer.
Do not wire the CTS & RTS pins on the 9 pin D-sub connector directly to the arduino pins as this will probably knacker your arduino. The MAX232 board you have has a spare RX/TX pair so you could try and connect relevant wires onto these spare pins so the MAX232 does your TTL/RS232 level conversion needed for the RTS/CTS signals.
So db9 pin 7 to pin 7 on the chip, and db9 pin 8 to pin 8 on the chip. Then connect the chip pins 10 and 9 respectively to my arduino?