scanfield:
I have an Arduino BT (docs.cc).
...
Board is set to "Arduino BT w / ATmega128".
Unless you purchased the board a long time ago and just now got around to it, you should be selecting "ATmega328" and not "ATmega168". There is no ATmega128.
scanfield:
Pressing the "reset" button on the ArduinoBT doesn't seem to have any effect on any of this.
The reset button only resets the ATmega328. It does not do anything with the BT device on the board.