I have had problems in the past where a sketch that works fine on the arduino won't work on the standalone, for me it has always been with with the input pins and my solution has been to use the internal pull up and look for low instead of high.
I am going to look over the blink code in a moment to refresh my memory but in the mean time try removing the reset button, simply place a 220ohm resistor from pin one to voltage and see what happens.