As far as I know ...
Reflashing "is" the only way to fix a reboot loop. (under normal circumstances if it were to suddenly start reboot looping for no reason whatsoever powering down the device ..pulling the batt for a few minutes (or replacing it with a diff. one completely) and then putting it back in and starting it up will break the looping...but you most certainly went and mucked with installing (in all likelihood) a kernel you should not have installed...and then used a flasher that is not meant for the n900 at all. So in your case reflashing is most likely the only way...)
Something odd is going on in the dialogue 'tween the vm 'buntu and the n900 ... they aren't communicating properly. Is the vm able to access usb's period? There is the 1st thing to check I think. Plugging another appliance in and seeing if the vm can access it will rule that prob out. After that possible prob is ruled out...pay attention to the fact again that the vm still can't "see" the n900 ...a driver to help recognize the n900 signature is not responding or is not there.
If everything "is" running properly...I would try multiple attempts and do the process as expediently timely (as quick as possible without making errors) as it may be it is timing out due to the time you are taking...just a thought.
Once it finally "sees" the n900 and you are able to continue and once it states that flashing is occurring the connection is solid and the process is committed....somewhere after this point (from what info you are showing...I don't know exactly what you are doing after this point) it is timing out due to a communication failure or a lack of the exact proper commands issued by you ...there is something going on that shouldn't be happening...
By properly reflashing...you are erasing the old firmware and putting the new in it's place. Whatever os / software errors problems or reboot loops on the old firmware are gone...they don't exist anymore.
It should be booting properly.