I’ve got a couple of “Normduinos” running crystal free on the internal 8 MHz oscillator. My fuses are set to the following:
low=0xE2
high=0xDA
extended=0x05
By the way, the default Arduino extended fuse setting is incorrectly setting the BOD level to a voltage incompatible with the board running at 16 MHz! The system will have crashed, most likely, before BOD kicks in.
My settings are very different to yours which appear to be the factory defaults, and as such should give you the 8 MHz oscillator. However, the default fuses also enable the CKDIV8 divide clock by 8 option, hence your problem.
Try my settings which will give you:
Low Fuse
SUT0
CKSEL3
CKSEL2
CKSEL0
High Fuse
SPIEN
BOOTSZ1
BOOTRST
Extended Fuse
BOD LEVEL 1
But absolutely no divide by 8!
Cheers,
Norm.