I probably should explain more on what I did for it to end up in its state.
So I was working with one board, and all the fuse/clock/freq settings were set in AVR Studio.
Then I connected a new board, and just clicked the 'program' button (not even visiting the fuse settings or any other settings). Of course it gave an error during programming, then it had the above problems from there.
So I just wired up a 3rd board, and closed out the AVR Studio window to reset the settings, and after setting the proper fuses first, it programmed fine from there. I suspect its a bug in AVR Studio . . .
That board cost me $200 . . . so I'm a bit motivated to get it to work . . .