Standalone ATmega168, powered by 4xAA batteries
I'd say that 4*AA are the problem. You're using 7805 for regulation and your soruce is going to give you at most 6.4 V, but will quickly drop to around 6. You need at least 2 V higher intput voltage to use 7805, so you won't be getting 5 V at the output and AT won't start. 

Also, 7805 will waste some power. If you can, try to find another way of getting the needed 5 V. 

I'm not sure about the rest of it. There could be other errors too.