Step 3
Now go again at Tools > Board menu and check the voice that corresponds to the chip on the breadboard on which you want to burn the bootloader and not the arduino board that you're using as the programmer. In our case is the ATMEGA328 as you can see from the picture.
Step 4
Go to Tools->Burn Bootloader->Arduino as ISP
If you get an error try pressing the reset button located at your arduino board and try again ( Tools->Burn Bootloader->Arduino as ISP).
You are done !
The ArduinoISP method for bootloading is simple but can be used only from arduino duemillanove boards.
Please see the UsbTiny bootloading method if you are using an arduino uno board.
Notice that if you have an arduino duemillanove board you can use the bitbang method explained here.
More documentation can be found here :
http://arduino.cc/en/Tutorial/ArduinoISP
http://arduino.cc/en/Tutorial/ArduinoToBreadboard
Below you can watch the demonstrative video :