Just a thought: see if it's the reset that's causing you grief - AFAIK you can do a hard reset for a few seconds after you click "Program" with the MELabs Loader and it'll all work. So try that, click Program, then straight away do a hard reset (assuming your board has a reset switch). If this works then you know theres a problem with the reset line. If it doesn't work, then I'm fresh out of ideas!

Bruce sounds like he knows more about the handshaking, but I'll second the fact that FTDI chips work like a charm with all bootloaders (I even use one on my Mac )