[HTC Sensation] pterion:
The zip file is an existing one, I chose it from the menus.

Here is a full recovery log:

Starting recovery on Mon Dec 5 23:55:32 2011
can't open /dev/tty0: No such file or directory
framebuffer: fd 3 (540 x 960)
ClockworkMod Recovery v5.0.2.0
recovery filesystem table
=========================
0 /tmp ramdisk (null) (null)
1 /recovery emmc /dev/block/mmcblk0p21 (null)
2 /boot emmc /dev/block/mmcblk0p20 (null)
3 /cache ext4 /dev/block/mmcblk0p24 (null)
4 /data ext4 /dev/block/mmcblk0p23 (null)
5 /sd-ext ext4 /dev/block/mmcblk1p2 (null)
6 /sdcard vfat /dev/block/mmcblk1p1 /dev/block/mmcblk1
7 /system ext4 /dev/block/mmcblk0p22 (null)
8 /misc emmc /dev/block/mmcblk0p31 (null)

I:Completed outputting fstab.
I:Processing arguments.
I:Checking arguments.
I:device_recovery_start()
Command: "/sbin/recovery"

ro.secure=0
ro.allow.mock.location=1
ro.debuggable=1
persist.service.adb.enable=1
ro.build.id=GINGERBREAD
ro.build.display.id=full_pyramid-eng 2.3.5 GINGERBREAD eng.koush.20110905.114148 test-keys
ro.build.version.incremental=eng.koush.20110905.114148
ro.build.version.sdk=10
ro.build.version.codename=REL
ro.build.version.release=2.3.5
ro.build.date=Mon Sep 5 11:42:12 PDT 2011
ro.build.date.utc=1315248132
ro.build.type=eng
ro.build.user=koush
ro.build.host=Koushik-Lion.local
ro.build.tags=test-keys
ro.product.model=HTC Sensation
ro.product.brand=generic
ro.product.name=full_pyramid
ro.product.device=pyramid
ro.product.board=pyramid
ro.product.cpu.abi=armeabi-v7a
ro.product.cpu.abi2=armeabi
ro.product.manufacturer=HTC
ro.product.locale.language=hdpi
ro.product.locale.region=
ro.wifi.channels=
ro.board.platform=msm8660
ro.build.product=pyramid
ro.build.description=full_pyramid-eng 2.3.5 GINGERBREAD eng.koush.20110905.114148 test-keys
ro.build.fingerprint=generic/full_pyramid/pyramid:2.3.5/GINGERBREAD/eng.koush.20110905.114148:eng/test-keys
ro.sf.lcd_density=240
debug.fb.rgb565=0
debug.composition.type=c2d
rild.libpath=/system/lib/libhtc_ril.so
rild.libpath.ganlite=/system/lib/librilswitch.so
rilswitch.vendorlibpath=/system/lib/libhtc_ril.so
rilswitch.ganlibpath=/system/lib/libganril.so
ro.gsm.2nd_data_retry_config=max_retries=3, 2000, 2000, 2000
ro.ril.enable.dtm=0
ro.ril.gprsclass=12
ro.ril.hsdpa.category=10
ro.ril.hsupa.category=6
ro.ril.hsxpa=3
ro.telephony.default_network=0
wifi.interface=eth0
wifi.supplicant_scan_interval=15
mobiledata.interfaces=gannet0,rmnet0,rmnet1,rmnet2
ro.opengles.version=131072
dalvik.vm.heapsize=32m
ro.ril.def.agps.mode=2
ro.ril.disable.power.collapse=1
ro.ril.enable.prl.recognition=1
ro.phone_storage=0
ro.emmc=1
ro.com.google.clientidbase=android-htc
ro.com.google.locationfeatures=1
ro.com.google.networklocation=1
ro.setupwizard.enable_bypass=1
dalvik.vm.lockprof.threshold=500
dalvik.vm.dexopt-flags=m=y
media.a1026.nsForVoiceRec=0
media.a1026.enableA1026=0
htc.audio.alt.enable=0
htc.audio.hac.enable=1
keyguard.no_require_sim=true
ro.kernel.android.checkjni=1
ro.setupwizard.mode=OPTIONAL
net.bt.name=Android
net.change=net.bt.name
dalvik.vm.stack-trace-file=/data/anr/traces.txt
ro.factorytest=0
ro.serialno=HT16NV800285
ro.bootmode=recovery
ro.baseband=10.14.9035.01_M
ro.carrier=TMD
ro.bootloader=1.17.1111
ro.hardware=pyramid
ro.revision=128
init.svc.choice_fn=stopped
init.svc.htcbatt=running
init.svc.adbd=running
ro.9kramdump=0
init.svc.recovery=running

I:Checking for extendedcommand...
I:Running extendedcommand...
Waiting for SD Card to mount (20s)
SD Card mounted...
Verifying SD Card marker...
d3d9041064bc01cad5bf8d5d337599f0

d3d9041064bc01cad5bf8d5d337599f0

I:Running script:
I:
ui_print("ROM Manager Version 4.8.0.6");
ui_print("December 6, 2011");
ui_print("Preparing to install ROM...");
run_program("/cache/dowipedalvikcache.sh");
assert(install_zip("/sdcard/update-cm-7.1.0-SelfKANG10-Sensation-signed.zip"));

parse returned 0; 0 errors encountered
ROM Manager Version 4.8.0.6
December 6, 2011
Preparing to install ROM...
about to run program [/cache/dowipedalvikcache.sh] with 1 args
mount: mounting /dev/block/mmcblk0p24 on /cache failed: Device or resource busy
mount: mounting /dev/block/mmcblk1p2 on /sd-ext failed: No such file or directory
umount: can't umount /sd-ext: Invalid argument
run_program: child exited with status 1

-- Installing: /sdcard/update-cm-7.1.0-SelfKANG10-Sensation-signed.zip
Finding update package...
I:Update location: /sdcard/update-cm-7.1.0-SelfKANG10-Sensation-signed.zip
Opening update package...
minzip: file is empty
minzip: Map of '/sdcard/update-cm-7.1.0-SelfKANG10-Sensation-signed.zip' failed
E:Can't open /sdcard/update-cm-7.1.0-SelfKANG10-Sensation-signed.zip
(bad)
Installation aborted.
result was NULL, message is: assert failed: install_zip("/sdcard/update-cm-7.1.0-SelfKANG10-Sensation-signed.zip")

Maybe, I should also add that this is a install ZIP file that I manually copied to the SD card.

Update: I noticed that when I adb push the file onto the SD card I have no problem installing the zip file from the recovery. I wonder what goes wrong when mounting and copying, hmmm...