Just confirmed on Nick Gammons website that the bootloader checksum on the chip matches what is expected for arduino UNO programmed via Adruino IDE 1.0 i.e. FB F4 9B 7B 59 73 7F 65 E8 D0 F8 A5 08 12 E7 9F. So, I think it is safe to assume the bootloader is good.
More details regarding the cable I am using: Based on the datasheet from the FTDI website, the cable looks to have the necessary wires i.e. Black - GND, Brown - CTS, Red - VCC, Orange - TXD, Yellow - RXD, Green - RTS. The only difference to the standard 6-pin cable is that I have an additional blue wire, which the datasheet says is RI (Ring Indicator Control Input), which isn't connected to anything.
So, I'm worried that having that blue wire dangling could be causing a problem.
My other worry is that the cable I'm using is 3.3V, whereas some i see are 5V. Maybe this could be causing an issue?