ok, heres a copy of what happened:

~ $ sudo debian
Setting up the chroot...
using device: /media/mmc1/debian.img.ext2
insmod: cannot insert '/mnt/initfs/lib/modules/2.6.21-omap1/mbcache.ko': File exists (-1): File existsUsing ext2 file system
insmod: cannot insert '/mnt/initfs/lib/modules/2.6.21-omap1/ext2.ko': File exists (-1): File exists
using /media/mmc1/debian.img.ext2 on the turbo-loop
insmod: cannot insert '/lib/modules/2.6.21-omap1/dm-mod.ko': File exists (-1): File exists
insmod: cannot insert '/lib/modules/2.6.21-omap1/dm-loop.ko': File exists (-1): File exists
.
..
...
....
Everything set up, running chroot...
[I have no name!@Debian: /]


I tried opening LXDE, and got the same thing. it opens for a split second and then goes away.

EDIT: By the way, it really does say `I have no name!`