I agree with tim7:http://img40.imageshack.us/i/sam0327u.jpg/This picture shows the power ground rail don't continue along the bottom. Jump the power and ground rails around 35 to some free holes near 25.I just got some atmegas from mouser in the mail today and followed this thread...and was able to burn the bootloader without a problem. You wiring all looks good except for the power connections on the bottom rails.
Connect Ground from uno to Ground on stand alone (pin 7 or 22)connect uno Rx to pin 2connect uno Tx to pin 3upload while holding reset on uno(remember tio tap reset on standalone when sketch size is shown in IDE)It should upload to standaloneDrew.
Yes, a 10K pullup resistor from pin 1 to 5v and pin 1 to button, and other side of button to 0v.Drew
In this setup you have two micro-controller chips connected to the same serial interface: one on the Arduino board, and one on the breadboard. In order for this to work, one of the chips must not interfere with the serial interface signals whilst the other is being programmed. It sounds as though the chip on the Arduino board is being reset, causing its bootloader to take over the serial interface. Check that the Arduino chip has its reset suppressed, and has its RX and TX pins both configured as inputs.