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Winavr 3.4.1 AVR studio 4.1 
I have a new program that keeps resetting. Also the timer interrupts
keeps firing too quick once I turn on the interrupts with sei. I have to
keep clicking through it and after maybe 10 times I get to step through
a single line of non timer0 interrupt code. The only difference is this
program and the other one I have no problem debugging is the board I
will run it on has a 32K external crystal clock and so I was using that
as my source code

Here is the code from the problem program for initializing the timer

/*
 * Initialize timers - init timer 0 to use the real time clock crystal
 * connected to TOSC1 and TOSC2.  Use this timer as a 1 ms thread
 * scheduling timer.  
 */
void init_timers(void)
{

  /*
   * Initialize timer0 to use the 32.768 kHz real-time clock crystal
   * attached to TOSC1 & 2.  Enable output compare interrupt and set
   * the output compare register to 32 which will cause an interrupt
   * to be generated every 0.9765625 milliseconds - close enough to a
   * millisecond. 
   */
  TIFR  |= BV(OCIE0);
  TIMSK |= BV(OCIE0);    /* enable output compare interrupt */
  ASSR  |= BV(AS0);      /* use asynchronous clock source */
  TCNT0  = 0;
  OCR0   = MS_OCRMATCH;     /* non debug use 32 match in 0.9765625 ms */
  TCCR0  = BV(WGM01) | BV(CS00); /* CTC, no prescale */
  
  while (ASSR & 0x07)
    ;
}

The only differences are the  ASSR  |= BV(AS0); and then while (ASSR &
0x07) and I define MS_OCRMATCH to be 125 in the other program. 

Am I doing something wrong?