I turned virtual memory on right before doing this part

"insmod /mnt/initfs/lib/modules/current/ext2.ko
mount /dev/mmcblk0p2 /opt
mkdir /floppy
mount -t jffs2 /dev/mtdblock4 /floppy"

I would advise you to reflash and start all over and try that. Once virtual memory was enabled it took around 25 minutes to finish on my 770.

Now I just wonder if there is a way to automate this if I ever need to reflash it. Its a PITA