New board ISP programming.

I have a new board I designed that will not read the chip id. I am using a ATMEGA2560. I have gone over the pin outs of the 6 pin ISP header and everything seems to be in order. I am trying to read it using a AVR Dragon and Atmel Studio 6.2 with all updates at the moment. It does read the target voltage as exactly 5V. But when I try to read the chip id I get the infamous 0xc0 when it should be 0x00 message.

My question is does the external oscillator even come in to play when I am trying to connect via ISP to a brand new processor never programmed? It should be using the internal oscillator at this point is that correct?

The reason I am asking is I am trying to eliminate the oscillator as a cause for this initial issue. I understand that once the processor is programmed to use the external oscillator then that is a different story.

No. Yes.