ATMEGA328 problems (not ATMEGA328P)

I bought some ATMEGA328 by mistake, but would still like to make use of them. I did some Googling and managed to get my sketch to up-load, but its not working as it should.

I've modified the Barebones ATmega boards to include the ATMEGA328, by duplicating the ATMEGA328P and removing the P. My code (which works fine on the ATMEGA328P) compiles and uploads fine, however it is running really slowly. I tried a simple sketch to dim an LED using PWM, but I get a fast flashing LED rather than a dimmed LED. I also tried changing the ATMEGA328P signature to the ATMEGA328 and programming it as an UNO, but still runs slow. I'm programming using an Arduino as ISP using an external 16MHz clock, but also tried the internal 8 and 1 MHz.

I spent most of Friday trying to solve this and then find the answer straight after posting. Its the fuses. Same problem but with an ATMEGA328P in this post