I plan to use my arduino Duemilanove to program the ATMega328 and use the chip on a reduced pcb. Aside from adding power and some capacitors, are there any other components needed for the chip to work?
Also, is the 16Mhz crysal needed for operation or is it only used for programming the chip?
Also, is the 16Mhz crysal needed for operation or is it only used for programming the chip?
Yes, the Arduino software set-up assumes a 16mhz (or 8mhz in some model boards) clock speed and is needed for both programming and running the sketches. For minimum space, sometimes people use a 3 terminal resonator component instead of a crystal and two padding capacitors. The resonator has it's caps built in, you ground the middle terminal and the outer two terminals wire to the AVR just like a crystal.