I'm using WinXP, and an Arduino self made serial board (with subd connector) and Atmega8. If not the same you're using, is similar.
I've used the bootloader with parallel programmer http://www.arduino.cc/en/Hacking/ParallelProgrammer
With this hardware configuration, when you try to bootload with Arduino 0010, there's a bug that makes you wait more than 10 minutes without messages until complete bootload. Perhaps this is happening with you, that's why you're thinking it's impossible to bootload with Arduino IDE.
If you already has installed Giveio (I'm not sure you'll need, but to be faster than messages, if not installed: http://web.mit.edu/6.115/www/miscfiles/giveio.zip
and installed XP_Stop_Polling http://www.melabs.com/downloads/XP_stop_polling.reg
If you know DOS, I suggest you try this:
make a parallel programmer cable (it's easy);
open a DOS prompt window;
go to this directory ...\arduino-0010-win\arduino-0010\hardware\tools\avr\bin
execute this (set highlighted to match your correct directory):
avrdude -C[glow]C:\[/glow]arduino-0010\hardware/tools/avr/etc/avrdude.conf -v -v -v -v -pm8 -cdapa -e -Ulock:w:0xFF:m -Uhfuse:w:0xca:m -Ulfuse:w:0xdf:m -F
and then this:
avrdude -C[glow]C:\[/glow]arduino-0010\hardware/tools/avr/etc/avrdude.conf -v -v -v -v -pm8 -cdapa -e -Uflash:w:[glow]C:\[/glow]arduino-0010\hardware\bootloaders\atmega8\ATmegaBOOT.hex:i -Ulock:w:0xCF:m -F
Remove the cable, and press reset. If led on pin13 blinks once and fast, then open Arduino 0010 and try to upload some sketch (blink example, for example).Or, if you think it's too complicated or not familiarized with DOS, try this:
Download Arduino 0007 http://www.arduino.cc/files/arduino-0007-win.zip
Run Arduino.exe or Run.bat;
Chosse correct IC and board;
Choose Comm Port;
Burn Bootloader with Parallel Port Programmer.
Good luck. And don't give up. You just had a bad day.