Update: I started playing with a genuine Deumilanove and exactly same problem happened to it - d13 led blinking, but avrdude says
stk500_recv(): programmer is not responding
I uploaded a largish sketch ~15kb to Arduino Nano v3.0 (clone) and that left the board in an unusable state. When connected to USB, a power LED goes on immediately and 1-2 seconds later the yellow "L" starts blinking really fast. Here's the board I use, it's a cheap clone, but it worked really well before today.
Now, when I try to upload a new sketch I get an error:
avrdude: stk500_recv(): programmer is not responding
I tried making and ISP programmer out of genuine Duemilanove, using nano's ISP pins and tried following official instructions (didn't use any capacitors/resistors). Either way when I click "Burn Bootloader" result is the same error:
avrdude: stk500_getsync(): not in sync: resp=0x15
I have connected "debug" leds to D7,8,9 and heartbeat fades in and out in idle, others stay dark. When I click "Burn Bootloader" all leds go dark then it does few quick blinks on 7, then similar pattern for 8, and then heartbeat resumes. Sometimes this sequence is repeated twice.
I also tried editing preferences.txt to bypass bootloader, but that didn't help.
How do I restore this board or do a low level reset? It seems to be in some failure mode, with pin 13 oscillating, but I don't know what that means.