The Pro mini actually has an external 8Mhz (or 16Mhz) oscillator.
Yes, but I changed the fuses to internal osc. afterwards.
avrdude -p m168 -cavrispmkii -P usb -U lfuse:w:0xf2:m
The internal osc. works fine but the bootloader doesn't work.
I checked the Arduino boards and thought they would all use external crystals. The LilyPad got one too? After flashing the boot loader, I could not get it programmed via serial. I wasn't the first though: http://arduino.cc/forum/index.php/topic,26706.0.html
I tried his fuse settings but still wasn't able to program via bootloader.