Iliaden:

Did you or did you not load the module for EXT2 mount?
Eg. did you run the two commands below?

# insmod /mnt/initfs/lib/modules/2.6.21-omap1/mbcache.ko
# insmod /mnt/initfs/lib/modules/2.6.21-omap1/ext2.ko

Did you check so that you had the 2.6.21-omap1 directory?

When you failed to mount the drive you copied the internal flash memory to itself; that is why you ran out of space.
Another reason for the failed mounting could be that the memory card wasn't detected. You have to check for the mmcblk0p2 directory in /dev/