You may receive an "Unable to scan JTAG chain" when trying to program your Cyclone® III FPGA Development Kit if you have the 4-position (SW3.4) mini-DIP switch set to "ON" as stated in Table 4-2 of the Cyclone III FPGA Develpoment Kit User Guide Version 1.1. SW3.4 should be set to the "OFF" position to scan the JTAG chain. Newer versions of the document have been updated.
You may download the latest version of the documents on the Cyclone III FPGA Development Kit products page.