Set the board to: Arduino Duemilanove w/ ATmega328
Try the Arduino Duemilanove w/ ATmega328p option instead.
The 328 and 328p are similar chips, but different enough that they have different "signatures" that the programmer expects to read.
If that fails, you might want to try "Uno" instead -- which is correct depends on which version bootloader has been shipped on the chip.
Set Programmer to: AVRISP mkII
This setting actually isn't required since you are programming via the bootloader, rather than via ICSP using a programmer.
The other thing to ensure is the foca board is connected correctly to the dev board. You need at least four wires connected: DTR, TX, RX, and GND. Optionally you can connect +3V3 (assuming it is a 3V3 board), or else you can power the board independently using a power supply into the power jack.