Mega8 + Arduino 016 = Issues

Hope someone can help, I have made a Mega8 prototype board that works perfect with my parallel programmer using WinAVR., But when trying to use Arduino 016, i get the following errors...

avrdude: AVR device not responding
avrdude: initialization failed, rc=-1
avrdude: Yikes! Invalid device signature.
avrdude: Expected signature for ATMEGA8 is 1E 93 07
avrdude: AVR device not responding
***failed;
avrdude: verification error, first mismatch at byte 0x0000
0xca != 0xff
avrdude: verification error; content mismatch

I get this error when trying to burn the bootloader and when trying to upload to IO board. (yes i have moded the preference file to "upload.using=parallel")

I have spen a few hrs on this and am seeking much needed help... Please help!!!