This thread really helped me out after updating the OS on my N810. I had the same problems - internal memory card was read-only. With the N810, I got in a serious Catch-22 position - couldn't disable virtual memory, couldn't format with virtual memory in use, couldn't get root without a new package, couldn't install new packages. Pretty frustrating, but solved thanks to this thread.

The steps that worked from updating to useful again were:

1. Enable Red Pill mode from Application Manager.
2. Enable maemo Extras repository (if you don't, you can't install OpenSSH)
3. Uncheck Use MMC to download packages (you can't see this unless you are in Red pill mode, and you can't install new software unless this is unset)
4. Install OpenSSH. Give it a root password when prompted.
5. ssh root@localhost
6. mount -o remount,rw /media/mmc2
7. Turn off virtual memory in Control Panel (memory, virtual).
8. <Optional> Backup files from MMC2 to MMC1 (removable) using your method of choice.
9. Format internal memory card using File Manager
10.