Sorry I forgot to mention this is the second time I installed it, I had the same problem before. I did a factory reset, reinstalled it, and same problem.
This method will give you a completely clean start, as well as a pre-rooted version of Froyo.
If you don't want to be rooted, you can go back to Eclair and the update to Froyo again.
So I have seen it posted both ways:
OTA update will not work after installing FroYo
vs
OTA update will work after installing FroYo, because the build numbers will be close.
I want to upgrade to FroYo, but I want to be able to get the "official" OTA update when it comes out, and Gingerbread, Honeycomb, etc.
The only thing holding me back is the OTA issue, I have not hacked around much on Android. I want to be able to make sure that I can recover my phone back to OEM if things go wrong (out of the box condition).
My device is not rooted, don't really plan on rooting it. Pretty happy with how it functions now.
Installed Froyo DK28 = no OTA update. I am on DK28, and when the official OTA starts going out I will just update using ClockworkMod Recovery (which will probably be sooner than if I waited for the OTA), no big deal. If you don't have Clockwork installed, it is easy to flash back to Eclair and then get the OTA update.