Assuming your partition is big enough you're not doing anything wrong.

The problem is the N900's watchdog*, which is supposed to reboot your phone if some process stops responding. Whenever you put the N900's CPU on full load for more than (say) 10 minutes (which can easily be done by file system I/O) you'll likely trigger its reboot routine.
You can alleviate that problem by running every program that's likely to trigger the watchdog with a lower nice priority:Unfortunately that doesn't solve the problem because even if your program has a low priority (and therefore the watchdog will be served first) due to a high load caused by your program it might take too long to free the memory that the watchdog requires and the device will still reboot.

The only safe way to avoid the watchdog being triggered is to make sure the N900 won't be on full load for too long. So in your case it should help to not copy everything at once but to copy one (or some) directory at a time, wait until the load is down to normal again and then start the next one.

*) rant: In my opinion from a technical/hardware point of view the watchdog is the biggest flaw in the N900's design. I've had numerous reboots due to the watchdog, none of them being justified. There was no runaway process, I just wanted to do some task that did not finish within a few minutes (dist-upgrade Easy Debian, compile something, etc.).
So if someone has found a way to disable the watchdog completely (without putting the N900 in R&D mode) I'd be grateful to hear that!


@Estel:
While we're at ranting, I totally agree with your browser rant. Unfortunately text browsers like lynx or w3m don't work that great on the N900, but you might want to try chimera2 [1] in Easy Debian or dillo3 [2] once I've managed to dist-upgrade to Wheezy (which I can't do on the N900 due to the watchdog, therefore I've started to tinker with qemu on my PC).
Afair there was a "dillo3 on Maemo" thread some time ago (it might as well have been a youtube video I stumbled upon). Both browsers are severely limited in their functionality, but for simple browsing they should suffice.
There are also midori [3] and arora [4], which might be alternatives. They are supposed to be lightweight, but according to my experience that highly depends on your system and I haven't found out yet why that varies so much.

[1] http://packages.debian.org/squeeze/chimera2
[2] http://packages.debian.org/wheezy/dillo
[3] http://packages.debian.org/squeeze/midori
[4] http://packages.debian.org/squeeze/arora

by installing swappolube one should be able get rid of wd kicking

I have it installed with recommended settings but i can't see any option to disable this watchdog - what excatly di you mean?

you can't. could you try the settings bellow

It works just finished the copy process successfully.
Man you just solved a long time issue i had with this device - every time i tried to copy a big file it crashed and i assumed the problem was that the N900 can't handle such big files because of some buffering issue - since it happened i got scared everytime i needed to copy big files from one place to another, so i started to do this only using N900 -> PC -> N900 back which was an annoying process. i'm glad to finally realize the cause of this.

What exactly from this settings do i need to keep permanent and how? does this affect anything else?

Thanks for the help

It's worth to add, that having swap on microSD and ED partition on eMMC also helps with performance. Honestly, I haven't had any reboots, no matter if I lzma 3GB image file for ED (on device), copy <whatever> size/files count directory, or any other heavy I/O thing. Of course, I also modified files suggested by freemangordon, but I use slightly different settings (tweaked to my liking):

I must add, that combination of swap on (class 2) microSD and above settings, not only device doesn't reboot during heavy I/O, but is also fully responsible (seriously, @900 mhz, even during packaging ED image with lzma and compressions (1 above default), I can do other things on device without much problem!).

/Estel

Tested copying 3GB file from NTFS disk on key to MyDocs and the opposite with your settings - works great - device is fully responsive during the copy process.

Is there a thread for results of these values manipulations? are they explained somewhere or just google one by one

The latter, I'm afraid. It's quite required to understand what they're doing, as setting them properly is strictly correlated with Your usage patterns. BTW, that's why the default Nokia ones didn't worked well - we're using device way different, from what they though we may/will

Estel - i made a few performance tests - switched back and fourth from using the mounted image vs using directly from the partition.

I can say that launching debian applications from the partition is faster in about 5% - 10%, but there is one strange thing i found - chromium is VERY slow and almost non responsive. can that be related to these settings somehow?

when i used your previous image (chromium had a white theme) it worked much faster.

Do you have any idea why?