[Nook Color Q&A, Help & Troubleshooting] cdaters:
So are you trying to go back to stock, or you looking to achieve a dual-boot (stock on the device, CM7 on a uSD)?

These are the steps that I would use to get back to stock, and then set myself up with CM7:

Note: I will be pulling information from various contributors and they too are pulling from various contributors, I'll cite my references at the end and include my thanks and credits there as well.

ALWAYS check the md5 hash for the files you are downloading to make sure you don't have corrupted files. This is a great windows utility to do that here.

The Fine Print: I guess I should also add that I offer no guarantee or warranty and will not be held liable if this shouldn't work for you, etc. etc. (but we all know that coming into this right?)

If you first need to re-partition and re-format your NC:

Download 1gb CWM 3.2.0.1 (ClockworkMod Recovery) sdcard image from here. (md5: 1319739d33642ed860e8044c3d55aa56).

Extract the clockworkmod .img from the zip file (if you can't open the file use 7zip) and burn it to uSD using win32diskimager (free) or winimage (shareware). These apps will need to be "run as administrator." If you're not sure how to do this see step 3 here. *** Some internal laptop/desktop readers will not work to do this, you may need an external USB reader if you run into problems. ***

While that's burning:

Download stock 1.2 ROM from here. (md5: ce75830e98b9dcad5989490f22faee62)

Download B&N v1.2 "new" 5+GB "/data", 1GB "/media" partitioning install package: Download (md5: b4018fe2c741f76b04fb4f7eca72f198)

Also download the following format install package: Download (md5: 78be3e8d0a1d8355be0509948aa5b476)

Once your uSD card is done being imaged with CWM, copy all those files to the sdcard - DO NOT unzip them

Power off your nook. Put your uSD card in and power on. The nook will boot from the uSD into ClockworkMod Recovery. Navigate in CWM using the vol up/down keys, "n" button to accept, power button to go back.

Navigate to "install zip from sdcard" and press "n" to enter a sub-menu. Then select "choose zip from sdcard".

Install the repartition package from the SDcard, to repartition /data (0p6), /cache (0p7), and /media (0p8).

Reboot! Once that is done, if the NC doesn't reboot and/or you are not dumped back at the main CWM screen, tap the power button until you see the "reboot system now" option and select this to reboot the NC back into CWM.

Now using steps 7 & 8 again, install the reformat package from the uSD, to reformat (and clear) /data (0p6), /cache (0p7), and /media (0p8).

Reboot! Once that is done, if the NC doesn't reboot and/or you are not dumped back at the main CWM screen, tap the power button until you see the "reboot system now" option and select this to reboot the NC back into CWM.

Now using steps 7 & 8 again, install the stock 1.2 ROM.

Once you've flashed the files; in the CWM main menu select "wipe data/factory reset"

Go back to the main menu, remove the uSD and then press reboot system.

At this point, you have a few options:

Stay with [gasp!] your stock NC

You can put CM7 on your NC's EMMC (replace B&N ROM entirely) using this guide.

Or, my prefered set up - keep stock ROM on device and run CM7 off uSD in a dual-boot scenario using this guide.

Credit

Credit goes to eyeballer, Dean Gibson, verygreen (and they likewise credit their sources within their guides found in the sources below.)

Sources

Dean Gibson - [HOW-TO] Repartitioning the NC back to 1GB/data, 5GB/media

eyeballer - [GUIDE] Install CM7, OC kernel + Clockworkmod to EMMC - ALL NOOKS! (Updated:7/14/11)

verygreen - [ROM][CM7] [v1.3] Size-agnostic SD Card image and CM7 installer for SD Cards.