I have an MCU that has an 8 single-pin ISP header. Do I use the AVR ISP in system programmer cable to program the board? There is no user-friendly development environment such as Arduino. So that leaves me with WinAVR with AVRStudio correct?
The current version of the Arduino IDE (0011) supports ICSP programming. I'm currently working on a user's guide that explains how to modify the Arduino files so it uploads using ICSP rather than an Arduino bootloader, but you can get much of the same information from the Arduino hacking
section of the Arduino home page.
JTAG uses four pins, but is not supported on the mega168, as far as I know. ISP uses six pins (only five of which might be necessary depending on your ISP programmer), and debugWire uses one pin (it connects to the reset line, which must be free of capacitance and have a pull-up resistor that is greater than 10k).
I also am not really sure what you are asking, and I'm not sure how to help you without knowing what you are working with.