Has anyone ever flashed the RSTDISBL fuse on their AVR, only to be totally locked out from reflashing the part with a serial programmer? I have! Then I made a High Voltage Mode programmer using my Arduino to fix it.
You can read about the fuse fixer/programmer and download schematics and a sketch on my blog: http://mightyohm.com/blog/2008/09/arduino-based-avr-high-voltage-programmer/
I hope someone finds this useful, it saved me from throwing away a perfectly good ATmega168!
What were the symptoms when you experience this problem with the Atmega168?
I have been experiencing a problem with burning .hex files through the ICSP heaer (running them on Atmega168 without bootloader that is). For example, if I burn the blinking led hex than the led will blink, but very dim, you can hardly see it in daylight. If I burn it from the Arduino IDE, it blinks as it should.
It will continue to run the code stored in flash (assuming you didn't change any other fuses), but the part becomes totally unresponsive to a reflash - it's as if the programmer isn't even connected. With avrdude I get the rc=-1 error (initialization failed). Your problem sounds different and may be related to another fuse setting.
Ok, thanks for your response!