Per is leading to the right direction.

The AT89S52 microcontroller besides Port2 (P2) has another three ports P0, P1 and P3.
Excluding P3.0(RXD), P3.1(TXD), P1.5(MOSI), P1.6(MISO) and P1.7(SCK) you have another
3x8=24 -5=19 pins free for any option. At any two of these pins try to connect a Button
and a Led to another.
I suggest to connect the Button to P3.2(INT0) so you may interrupt the running program
of cource you have to setup the INT0_ISR,
and the Led to P3.7 to show any flash on, off at situations helpfull like Per said

If you remove the microcontroller from the socket while programming then this is not
the ISP (In System Progmamming) method. The ISP concept is to programm the microcontroller
on board on the running circuit using these line MOSI, MISO, SCK and RST. You have to make
an ISP header on the target board and by that you use the ISP method. One of the typical ISP
programmers is from ATMEL AT89SIP and costs about 25$. Don't try to make it, buy it.
If you have to
a. remove the microcontroller from the board,
b.connect it to an other programmer,
c.write/verify the flash,
d.disconnect from the programmer and to
e.connect to the target board,
then after a few runs the pins will be ruined and random problems will appear.

About serial communications
Have done this before ? to connect a PC sending/receiving data to a board with '51 like AT89S52 ?
The setup of serial communications at the microcontroller side have to do be done according
to the applications' specifications.
Are you using the Serial Interrupt or the polling method of the RI/TI ?
What is the speed of transiming/receiving data ?
Is the hardware about serial comms on the microcontroller setup with
the right values and procedures ?
How do you use the data received at the microcontroller side ?

If you present formatted and documented pieces of your code it would be easy to find the missing part.

Remeber to try to solve one issue at a time.

K.L.Angelis