Try it with a fresh AT89S52. If it works now, throw away the old AT89S52. If it still doesn't work, throw away the programmer.

We use one of the bast and most expensive programmers there is (large production) and often the signature does not read. Cleaning the contacts to a shine result in the signature coming through.

This is NOT KNOWLEDGE, but what I have surmised is that the signature read (I do not know about Atmel since I do not use them, but for Winbond and Philips) is done with much smaller currents than programming and thus any minuscule corrosion/dirt/whatever in the contact between programmer and chip will result in a functioning, programmable chip not giving the correct signature.

The instruction to production here is "if the signature error comes up click ignore"

Since I can imagine that some kitchen table programmers do not verify after programming let me add: If your programmer does not have an automatic verify cycle ignore the above.

Erik