Also posted at:
https://stackoverflow.com/questions/49639049
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Device signature = 0x000000 usually indicates a wiring problem. You should have a 0.1 uF decoupling capacitor on the power lines of the chip. You should also do a Tools > Burn Bootloader before Sketch > Upload using Programmer. The reason is this will set the fuses of the microcontroller according to the board you have selected. Note that if you set fuses for an external clock source and you have no external clock source then you will "brick" your ATmega32 until you connect a clock source to it.