Seems you need to tell the device to use its own memory, not the ones on ANY of the two (if you have an N800) SD cards.

I had the exact same problem you are having, until I got into the application manager setup and told the device to use the "onboard memory", it kept un failing.

Just READ and I really mean "R E A D" the error messages: bla bla bla...then: Could not open file meaning it can't WRITE the file being downloaded into: /media/mmc2/blablabla.....

Until I realized this and changed (uncheck the box) the "Use MMC to download packages" it didn't worked.

Unfortunately this has to be done while on RED PILL mode. Look around on this board, or on MAEMO.ORG on how to get on RED PILL mode, once this is done, you go to:
Application-Manager -> Tools -> Settings and uncheck the "Use MMC to download packages." option.

Hope this helps... It really was a headache for me. And i also think is some sort of undocumented feature with a bug that has to be fixed on OS2008.

Comments from Nokia / OS 2008 developers please ?

I've downloaded lots of stuff and never had this problem. I have a 2gb and 4gb card.

Since I installed OS2008 on my N800, I had the problem I described in my previous post.

It was hard to find.... as I said, it was "just" a matter of reading , really reading and understanding the log messages.

Once I did that, told the app manager not to use the SD card's memory (none of the two) and all went fine.

My SD cards are both 1GB and are almost empty, both of them.

Go figure what is going on, but this thread proves to me that there is some weird situation going on with the Application Manager trying to download apps and/files into SD memory.

Can anyone else confirm this situation please ?