Thanks,
If thats the case, I cant see why I cant bootload a nano selecting ATMega328 using Arduino and a AVR Dragon but can by using another nano as the ISP programmer.
On another note, when using Studio 7 and the AVR Dragon, the only selection for ATMega328 in the Arduino subdirectory is Optiboot, theres no ATmega328 and this wont work with this nano.