Ft232rl interface and avr - avr damaged when connecting the ft232rl
If the atmega is socketed, you could pull it out, put it on a breaboard and use another arduino as an ISP programmer (see http://arduino.cc/en/Tutorial/ArduinoToBreadboard ) to load a sketch that blinks an LED (or even almost all of the GPIOs and says something repeatedly on the serial transmit pin.  

You could do this with the fuses set either for internal oscillator or for the crystal - there are merits to both.

With a USB port theoretically providing only 5v, and that circuit intending to give the atmega 5v supply, especially with the 1k resistors in there it's extremely unlikely that the ft232rl damaged the atmega.  

Most likely something is not right in the assembly of the circuit and it will work when that is corrected.  Second most likely is a wrong fuse setting on the atmega.  Actual damage would be third - and more likely from ESD or bumping wrong wires together while working on it than anything the ft232rl could have done to it.