Why VPP isn't 12V with safe resistor when a working microcontroller is inserted into this circuit?
If the current through the resistor is 120uA, the voltage across is will be 12V, meaning that you'll actually get 12V-12V=0V at the pin. That upper limit is a limit on what the microcontroller will draw, not a limit on what should be supplied.

What's happening is that the microcontroller is only drawing 60uA or so, but the resistor is dropping 60uA*100K=6V, so the output voltage is 12V-6V=6V. You need a much smaller pull-up resistor, so that the maximum programming current doesn't affect the output voltage much.

If you use a 2.7K resistor, for example, at 250uA the voltage at the pin will be 12-(250uA*2.7k)=11.325V, which is acceptable.

edit: actually, according to the datasheet, it needs to be at least 11.5V. A 2.7K resistor will (almost certainly) work, but technically it should be (12-11.5)/250uA=2Kohm maximum.