planecrazy29:
To test this theory I soldered a piece of wire to the trace between the MCU reset pin and the pullup resistor effectively bypassing the cap.
Oh I didn't notice that C5 cap in your schematic, the same problem happened to me once. Removing the auto-reset cap did the trick for uploading with ICSP. Now I use a mini jumper (as in the arduino severino) to enable-disable auto-reset (to disconect the cap).