I read in the AVR datasheet that on port B, some of the pins are used to reprogram the AVR. So for now I am going to use a different pin set on the STK (probably port A) since power is coming from the parallel port during my tests.
Speaking of power, I measured that ~3.4V are sent from my parallel port when the line is active and drops to ~2.6V once it gets to the breadboard. Unplugged, it is ~4.4V. I also tried to measure the current with my multimeter and got 0.00 even though the light was lit, so I'm hoping this means that the current is very small and won't fry my stuff :)
Soon I will need to plug in my real LD-V1001 and see if my dragon's lair hardware is still even working (that could be the problem).
UPDATE: I just plugged in my LD-V1001 to my dragon's lair game and I got all 3 beeps (I didn't even have a disc in the player but it proves that the strobes were working).
Also, I am communicating to/from the STK600 from a random PC I have through the parallel port, using the command/status strobes and the data lines (I made a cable to control a real LD-V1000 player via the parallel port a few years ago and am using that for testing).
In other words, both the STK600 and the dragon's lair hardware are working properly, but Dragon's Lair can't see the strobes sent from the STK600. I don't know why not, but once I find out, there will be much rejoicing.
UPDATE: I just tested the STK600 again connected to the Dragon's Lair hardware. No dice. I guess the next things to check are the lengths of the strobes when they are active and whether the ribbon cable from the Dragon's Lair to the STK600 is passing the strobes along properly. Since it is working with the LD-V1001 all I can think of is maybe the contacts aren't touching on my customized connector where they are on the LD-V1001's connector. I'm narrowing the possibilities down to a very small place where problems can be occurring.