Hi Craig,
Your schematic seems OK however I would never do the following.

1. Pulling down D1 from printer port. Instead I will pull up with 10k.
2. Using 74HCT573 [ Latch ] like a buffer with LE permanent High. I would use 74HCT541 instead.
3. Pull down resistor on pin 9 [ RESET ] of micro is missing. Unlike Philips Atmel micros don't have an internal pull down on reset. If you want In System Programming and not In Programmer Programming put a pull down resistor.

Given below is link to an excellent ISP programming software and schematic. I would suggest you to modify your hardware a bit [ Interchange LPT pins ] to suit this software and check that there is no hardware problem atleast.

http://www.kmitl.ac.th/~kswichit...gm30a.html

Regards,
Prahlad Purohit