Trying to figure out the timer setup in Atmel Studio 6 for an ATmega16 microcontroller. And I just don't get it. I am trying to create a TickCount similar to GetTickCount() Retrieves the number of milliseconds that have elapsed since the system was started, up to 49.7 days.

Code looks like this:

#define F_CPU 8000000UL                         // 8MHz - prevents default 1MHz
// *** timer code necessary for handling lost coms, use volatile when variable is accessed from interrupts
volatile unsigned long TickCountSys;            // Number of milliseconds that have elapsed since the system was started.
volatile unsigned long TickCountComs;           // TickCountForLastComs
volatile unsigned long TCNT0_overflow_count = 0;

ISR(USART_RXC_vect) {
    TickCountComs = TickCountSys;               // Milliseconds since system started when received something.
    //blah blah
}

void timer_init() {
    TIMSK=(1<<TOIE0);                           // Enable timer overflow interrupt for timer0
    TCNT0=0x00;                                 // Set timer0 counter initial value to 0
    TCCR0 = (1<<CS00);                          // Start timer0 without prescaler
}

ISR(TIMER0_OVF_vect) {
    TickCountSys++;
}

int main(void) {
    timer_init();
    DDRC = 0xff;                                // Set all pins on PORTC for output
    sei();
    unsigned long TickCountENQ;                 // Tick count for sending enquiry character, 05dec, ^E
    char coms = 0;
    char ignore_coms = 0;
    while(1) {
        coms = (TickCountSys < TickCountComs + 50);
        if (TickCountSys > TickCountENQ + 25) {
            TickCountENQ = TickCountSys;
            // If not ignore coms, that is need coms, and has coms, i.e. has not lost coms, then send new Enquiry char every 25 ms
            // It stops asking for coms if coms is lost, and does nothing until new command received and then starts syncing again
            if (!ignore_coms && coms) USARTWriteChar(0x05);
        }
        if (!coms && !ignore_coms) {            // If not coms and not ignoring lost coms then stop all movement
            PORTC = 0x00;
        }
        //blah blah...
    }
}

Tools-->Device Programming-->Fuses says:

BODLEVEL    4V0
SUT_CKSEL   EXTMEDFXTALRES_16KCK_64MS

As far as I know this is the correct settings (was delivered that way). There is just something I do not understand by reading the timer tutorials.