Try pulling the battery, then insert it. Hold POWER & VOLUME DOWN & MENU until you are back into recovery and try a nandroid again. Not real sure if this will make a difference, but it's worth a shot.
If this does not work, then I'm not sure what exactly is going on and I would not Update to VD until your recovery issue is fixed.
You could either reinstall your custom recovery or wait for some advise from a better educated Android Pro.
EDIT: If you are still having problems, You can always flash TR 1.6.2, which is for V9, and your internet and everything else will work right. ThundeROM Downloads
Here