Confused about bootloaders

Can anyone help clear my confusion as regards the need for a bootloader when using the ISP connector/option?

I had some ATmega8A chips lying about and decided to build a simple circuit and try and use the Arduino core+IDE to program them.
(see diagram below).
Because I’m using the ISP connections (MISO, MOSI, CLK and RESET) via my Atmel AVR ISP MKII for direct programing, do I still need a bootloader?
I would think not, but can the Arduino IDE program boards without adding a bootloader or must it be included always?

I found an entry in boards.txt (for the Arduino NG) that also uses the ATmega8 but it specifies a bootloader.
What changes (if any), are required to support my new board?
Is it a case of simply deleting the lines that make reference to a bootloader, and if so, what about the fuse setting for the AVR for example ose that set external xtal clock and no code locking?
The only mention of fuses that I can see are on the same lines as the bootloader entries.

The Arduino NG entry below:

##############################################################

atmega8.name=Arduino NG or older w/ ATmega8

atmega8.upload.protocol=arduino
atmega8.upload.maximum_size=7168
atmega8.upload.speed=19200

atmega8.bootloader.low_fuses=0xdf
atmega8.bootloader.high_fuses=0xca
atmega8.bootloader.path=atmega8
atmega8.bootloader.file=ATmegaBOOT-prod-firmware-2009-11-07.hex
atmega8.bootloader.unlock_bits=0x3F
atmega8.bootloader.lock_bits=0x0F

atmega8.build.mcu=atmega8
atmega8.build.f_cpu=16000000L
atmega8.build.core=arduino
atmega8.build.variant=standard

##############################################################

The circuit diagram of my ATmega8A based board:

Any input greatly appreciated.

Can anyone help clear my confusion as regards the need for a bootloader when using the ISP connector/option?

The ISP connector is used to Install the bootloader. The AVR programmer asserts the Reset line and takes over control of the part.

If you select File:Upload Using Programmer, the sketch is loaded without the bootloader and starts immediately after a Reset.

Thank you very much CrossRoads, it worked perfectly.

Glad to help.