I do have v2.1 and have made the changes as you suggested. I now have the following error:

avrdude: Warning: cannot query manufacturer for device: error sending control message: Operation not permitted
avrdude: error: could not find USB device “USBasp” with vid=0x16c0 pid=0x5dc

USBasp is selected as the programmer and USBasp is selected as the active USB device in the virtual machine.