Interesting, the Arduino Duemilanove or Nano w/ ATmega328 bootloader works like a champ!
I suspect it's too late now but when you tried using the processor with the Uno / Optiboot bootloader did you remember to select Arduino Uno?
So maybe not a bad chip.
Certainly does not seem to be.
Maybe the Optiboot loader should only be used with the Uno (because of the ATmega8U2 interface)?
Nope. The bootlaoder has no awareness of what's on the other side of the serial port. It's all just bytes coming and going through the serial port.
Maybe timing is different?
The baud rate is different.
I've used the Optiboot successfully in several non-Uno instances, but maybe I've just been lucky up until now.
I'd say unlucky this time. Unless you have stumbled on a bug, Optiboot should work fine.
It's good to know the life of an AVR processor has been spared!