no response from the developer yet- but I talked to spark fun where is bought it and sent them my tests... I did the "general test" and the "tone test" direct from the Arduino IDE version 22... both with failed results. Sparkfun said it was the bootloader too and has a tutorial to re-burn here:
http://www.sparkfun.com/tutorials/247the tutorial is for an UNO, so the only change you need to make is in the FUSE file with this:
#############################################
mega2560.name=Arduino Mega 2560
mega2560.upload.protocol=stk500v2
mega2560.upload.maximum_size=258048
mega2560.upload.speed=115200
mega2560.bootloader.low_fuses=0xFF
mega2560.bootloader.high_fuses=0xD8
mega2560.bootloader.extended_fuses=0xFD
mega2560.bootloader.path=stk500v2
mega2560.bootloader.file=stk500boot_v2_mega2560.hex
mega2560.bootloader.unlock_bits=0x3F
mega2560.bootloader.lock_bits=0x0F
mega2560.build.mcu=atmega2560
mega2560.build.f_cpu=16000000L
mega2560.build.core=arduino
#############################################
You also need to download WINAVR from SourceForge AND one of these tools:
http://store.atmel.com/PartDetail.aspx?q=p:10500054Or the one that SparkFun has listed in the Tutorial- but I think the tool from Atmel would be less buggy- since it is made for the chip in the Mega 2560

can you say YIKES!