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Yes, that is exactly what I was saying you should do. Except it's not "Tx, Rx, and two other i/o pins". You need to hook up Tx, Rx, and you need to provide power and ground to the chip. No other i/o pins. Just be forewarned, I know sometimes those usb to serial cables don't work exactly like a serial port. I believe admin uses one for his stuff, but I've also heard other people on the forum say they've had trouble getting stuff to work with them.
I dont understand what you mean in your second paragraph. I thought I could connect Serial Rx to an output port and Tx to an input port. What do you suggest?