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Without seeing your board I cannot say for sure. However from the factory the device should power up into ISP mode. You can confirm this by connecting using Hyperterminal and sending a single 'U'. The 'U' should be echoed back. See the datasheet for the device and the Flash magic application notes for more information.
If you advise FM to use DTR and RTS, you should connect these signals to your board, instead of only GND, RXD and TXD. Please search www.keil.com for a schematic of their MCB900 board, if you need to know how this should be done.