I have now enabled the r&d mode, and issued these commands

sudo flasher-3.5 --set-rd-flags=no-omap-wd

sudo flasher-3.5 --set-rd-flags=no-ext-wd

My n900 still doesn't boot. When I turn it on, I get the Nokia screen, with the r&d info, then the screen blanks and a yellow led lights up. The left side of the keyboard blinks for a while, then the led and the keyboard turn off. After a second the keyboard blinks a few times and thats it.

It seems that the looping was caused by the watchdog rebooting the phone over and over. However the reason why the phone doesn't boot remains still a mystery. I can't understand why it doesn't boot even though the flashing seems to go well ....

On the positive side, my battery hasn't depleted yet though I haven't charged it since I started flashing. (No worries, I've got a friend whose phone I can use to charge the battery, if it depletes. )