Fungus - I uninstalled the drivers Windows assigned then manually installed drivers that I downloaded from ftdi.com but upon closer inspection found that they were exactly the same drivers.
Where is your crystal? I don't see one in your schematic. It won't work unless you set your fuses for internal clocking. Otherwise you will need to add an external crystal(w/caps) or a resonator.
Oric_dan - firstly I checked the voltage between the Gnd and power leads of the FTDI cable and it is 5.46 volts. I changed the port settings to set RTS on close but still no successful upload. I then connected a series resistor and LED to "cable side of the 0.1 uF blocking cap" as per attached circuit diagram. The LED doesn't light while the code is compiling then as it starts to try and upload, it briefly flashes on / off then comes back on while the code tries to upload. It then goes out when theavrdude: stk500_getsync(): not in sync: resp=0x00error displays. From my rudimentary electronics understanding does this mean that seeing as the LED on the RTX line has it's anode to + 5V that the RTX line is low when the LED is illuminated ? Does any of this information help to ascertain what is happening here or could someone just point me to an online store, with reasonable postage rates to Australia, where I can purchase a FTDI cable that works out of the box, so to speak. Thanks again to you all, for your help, Pedro.
oric_dan Yes I think that I will just put the purchase of this cable down to experience and buy one from a more reputable vendor. Am I correct in assuming that is you have a 328 with a bootloader burnt to it , appropriate to the board that you wish to use it in, that you only need a FTDI cable. Whereas if you don't want a bootloader on the chip (for space saving considerations) that you need an AVR programmer, or use the Arduino as a ISP.