Hi,

Yeah, the underlined part seems to be the problem...

I am not familiar enough w/ Jake's script to tell you what went wrong with it, but I can tell you the way I got Android working:

Installed Gparted and partitioned my 2gb sd card as 1gb fat, 8mb unformatted, 1gb ext3.
Gained root in the terminal and moved rootfs tar to my ext3 partition. Untarred it, then flashed the Android kernel w/ flasher-3.0.

Instructions on the needed commands are on the NITdroid homepage.

And viola! It worked.