Fuse mystery with a Duemilanove/ATmega328P

I think the ArduinoISP does/may not read the fuses (and thus returns 0). If there were all 0 you (probably) wouldn't be able to program it.

I recently made a sketch that detects your current board and fuses:

If you have another board (which it looks like you do) you could load that sketch up, connect up the wires as shown on that page, and see what the fuses really are.