Atmega 8 is not programming once it is set to external crystal?
Assuming you set the correct fuses, the crystal may not start oscillating because of wrong feedback capacitor values. The "correct value" depends on the load capacitance of the crystal.

See that


you have properly connected external feedback capacitors
the capacitors have the recommended value (refer to uC and crystal data sheets)
the PCB traces are as short as possible (long traces introduce a parasitic capacitance and high impedance)
try setting CKOPT fuse (from mega8 data sheet: "When CKOPT is unprogrammed, the Oscillator has a smaller output swing. This reduces power consumption considerably. This mode has a limited frequency range...")