Watchdog Timer

Hi folks

So I want to use the watchdog timer, and so I referred to the atmega168 datasheet to learn how to do so.

I've managed to get it working, and I've gotten different prescaling values to work so that it resets after different timeouts, and tested that these are indeed working (ie after .5 sec or 1 sec)

The problem:

it stops execution, but doesn't seem to reset. In fact, pressing the reset button does absolutely nothing, and I need to unplug the arduino and re-plug it to reset/program it again.

I suppose that I'm missing something about the bootloader, and that somewhere I need to specify an address where it should go upon resetting. Has anyone here used the WDT with the arduino? what am I missing?