Download a custom ROM file to your computer, I like aospCM7 for all the gingerbread goodies.
You'll need gapps to get the market working too, so download it as well
Once in recovery do the following:
Connect your phone via usb, and push the custom ROM of your choosing onto your sdcard:
adb push c:/....PATH_TO_ROM_ZIP_FILE/NAME_OF_ROM_ZIP_FILE /sdcard/NAME_OF_ROM_ZIP_FILE
adb push c:/....PATH_TO_GAPPS_ZIP_FILE/NAME_OF_GAPPS_FILE /sdcard/NAME_OF_GAPPS_FILE
note: there is a space before /sdcard
Then in recovery:
1) wipe cache
2) under advanced, wipe dalvik cache
3) under mounts, format boot, cache, data, and system
4) select install zip from sdcard, then choose the ROM zip file you pushed via adb. Note-do not choose install update zip
5) select install zip from sdcard again, this time choose the gapps zip file you pushed via adb. Note-do not choose install update zip
5) back into the main menu of recovery, choose reboot system now
It will take along time for your phone to reboot since it has to rebuild everything, once you get to click on the android to setup your phone, choose to setup your account later, since you don't have a physical keyboard to use at this point, just set up your google account later.