I have just set up a 16F877 circuit for ICSP using this interface
with my desktop PC. (XP service pack 2 BTW). No problem with
read, verify, or erase

I used the settings with IC prog suggested earlier in the thread:
I/O delay 20, JDM programmer, Direct I/O with nothing inverted.
Have you have also powered the pic seperately with 5 volts while trying
to use this interface?

Cheers, Art.