Did you even download it and try?:X
Plugging in your own LED shouldn't be "basic diagnostics"... if you can't connect to it the LED won't do you any good:P
When you plug the board into the computer, does a Com port show up under Tools and Serial Port? If not, then it's probably what David suggested.. you just need to update your drivers.
If it does show up, and then you can't upload.. then make SURE you have the correct board selected. If you have the Duemilanove, it should reset automatically when you upload a sketch.. but something to try, push the upload button, hold down the reset button until the sketch compiles, then release.
But tell us what you have tried.. maybe some links.. explanations of why you think it's a bootloader problem?