Uploading bootloader issue

I'm using the USBtiny and an arduino decimillia to try to put the bootloader on some fresh 168s for a project I'll be doing where i'll move the 168's to a standalone setup. I haven't really researched programming directly to the 168's...

My problem is whenever i try to run the bootloader in the arduino.exe application (for the decimillia) it tells me:

avrdude: usbdev_open(): did not find any USB device "usb"

I'm fairly certain everything looks like it's running properly - i have my green light on my USBtiny, i've got external power running to the arduino with the jumper on the USBtiny off, i've got my 6 pin header running into the arduino with the side with the red wire oriented to the silk screened '1' on the arduino, and the AVR programmer shows up in "my devices" in the control panel. One thing that was kind of strange was i couldn't get my green light until i took off the top panel of the box... so could something being loose be the problem?

I've tried uninstalling the v1.12 driver and reinstalling the 1.10 with no luck. Any suggestions?

You are selecting Burn Bootloader > w/ USBtinyISP right?

I know with the AVRISPmkII, you need to uninstall the AVR Studio drivers before you can use the programmer with avrdude / Arduino, but I didn't think it was also true for the USBtinyISP.

I'm using the arduino.exe program, going to tools>burn decimillia bootloader. Then i get that error message. I'm not sure if that answers your question :/.

Is there another more obvious way to accomplish what i'm trying to do? (just burn the arduino bootloader on a 168).

It sounds like you're using an old version of the Arduino environment that doesn't allow you to choose which programmer to use. Try downloading Arduino 0011 and burning the bootloader with that: http://www.arduino.cc/en/Main/Software