4. knowing the bootloader was successful but upload sketch failed i was able to upload a sketch by changing the board to simply Arduino UNO (go figure)
Therefore the IDE must be told to use a Uno board, not the board you added stating it's a 328 chip, that was required just to allow the burn bootloader step, where the signature is being read directly from the chip.
@h4tyes, i was able to use the Arduino itself as an ISP.here is the complete entry in my boards fileCode: [Select]sparky.name=Sparkysparky.upload.protocol=stk500sparky.upload.maximum_size=32256sparky.upload.speed=115200sparky.bootloader.low_fuses=0xffsparky.bootloader.high_fuses=0xdesparky.bootloader.extended_fuses=0x05sparky.bootloader.path=optibootsparky.bootloader.file=optiboot_atmega328.hexsparky.bootloader.unlock_bits=0x3Fsparky.bootloader.lock_bits=0x0Fsparky.build.mcu=m328ausparky.build.f_cpu=16000000Lsparky.build.core=arduinonotes1. using an Arduino Uno with the Opti Boot bootloader.2. successfully able to bootload the ATMEGA328-AU selecting the board above from the boards list3. after the success of the bootloader, when i attempt to upload a sketch i get 'm328au' is not a recognized device4. knowing the bootloader was successful but upload sketch failed i was able to upload a sketch by changing the board to simply Arduino UNO (go figure)5. this was the same on OSX Lion, Windows 7, Vista 64hope that helps