[G1 Android Development] ThR1LL:
Did you mount your SD card before you did that???

Also here's the guide a little neater I retyped in an email ages ago for a friend and he told me he understood it better so hopefully it will help you guys

Preparing Your Phone For Root

If you have US-RC30/UK-RC8 or higher, you will first need to downgrade your phone to a previous version. (Skip these steps otherwise)

Format your phone's SD card to FAT32 mode:

Hook your phone up to your computer using a USB cable and then wait for the notification to show up in your title bar of your phone.

Click the notification, and then click "Mount".

A new removable disk should show up on your computer. Right click it and select Format, and select FAT32 as the file system type.

Download and unzip the RC29 or RC7 image file. Copy the DREAMIMG.nbh file to the SD card. (RC29 for US, RC7 is for UK)

Turn the device power off.

Hold Camera button, and press Power button to entry bootloader mode. You should see a gray/white screen with instructions to flash your phone with the update on your SD card. If you don't see that, make sure you followed the instructions properly.

After it is finished, perform the restart your phone.

Rooting RC29 or Lower Phone

Download either Cyanogen's Recovery or Amon-RA's Recovery, rename whichever recovery you downloaded to recovery.img, and copy whichever one you chose to your SD card (see the previous instructions on how to copy from your computer to your Phone's SD card).

Download the latest Radio and copy the zip file to the SD card.

Download the Hard SPL and copy the zip file to the SD card.

All files must be on the root of your SD card.

Restart your phone. Wait for your phone to start up fully and show the home screen.

After your phone starts up, hit the enter key twice, type "telnetd" and press enter. (Yes, it will start up a contact search, don't worry. Just type it.)

Download an Android "Telnet" application from the Market and connect to localhost.

If you connect successfully, you will have a root prompt "#".

Type the following into Telnet (these commands will give you root access easier in the future):

# [B]mount -o rw,remount -t yaffs2 /dev/block/mtdblock3 /system[/B]
# [B]cd sdcard[/B]
# [B]flash_image recovery recovery.img[/B]
# [B]cat recovery.img > /system/recovery.img[/B]

Now you have root!!

Flash Radio and SPL

Now that you have root, you will want to apply "Hard SPL" to your phone. HardSPL is what will allow you to apply flash images from other regions (like UK on US phones, and vice versa), create full backups of your phone, install the latest build from the Android source, and usually resurrect your phone if it is "bricked". To avoid "bricked" phones let's flash our "Radio" first. You have already downloaded these files to your SD card, so now you can apply them.

Power off your phone.

Start up in recovery mode by holding home and pressing power.

You will now enter recovery mode.

Press Alt+A with Cyanogen's or Alt+F with Amon-RA's to see the .zip files

Select the Radio file.

After the update is complete, hold Home and press Back to restart.

Press Alt+A or Alt+F again and select the Hard SPL file and repeat the previous step when the update is complete

Flashing New ROMs

Now we can finally start flashing ROMs!!! You are still running an old version of Android, but you want to upgrade to the latest and greatest update! You can do this, and not lose root by downloading modified versions of the updates.

I recommend CyanogenMod 4.2.15.1 or The Official Donut Build Rooted

Download the image

Copy it to your phone's SD card.

Turn your phone off

Start up in recovery mode by holding Home and pressing Power.

Press Alt+W to wipe your device. (You need to do this, or the device may hang at the flashing Android screen)

Press Alt+A or Alt+F and select your ROM file to apply the update.