Try to use a larger resistor. The data sheet specifies 20K - 100K as the value of the RESET pull-up resistor.
Thanks for the suggestion. I tried about a 87K, but it didn't seem to help. The help file says that the LED would normally blink orange for a "Reversed target cable connection, or not correct pull-up on the reset line."
Verify your wiring again. In the third photo on your site, the value of VTarget should never be ZERO if you've wired it correctly.
I rechecked the wiring again, but I didn't find any problems.
Should the VTarget on the Board tab of the Connect dialog always read the voltage on the isp's pin 2 (VCC). (assuming GND is connected too.) For example, if pin 2 has +5v then VTarget should read 5v? I'm trying to rule out a defective ISP. I'm sure that pin 2 is +5v and the ribbon cable is good.
Thanks again for your help.