Giskard,
I created my account here to thank you for the tips and to commend you on your awesomeness. However, it turns out I am one of the odd ones. After initially getting the "low memory" warning, I found this thread, and did the following:
1) changed date & re-downloaded the 4.08 update
2) wiped the cache from the recovery interface
3) used app2sd to move all apps to SD card, I have 592MB free
Unfortunately, when I apply the update, it says "rebooting", and when the counter gets to 0, it reboots...normally. The update isn't applied, the phone then says my software is up to date, but it's 4.06.605.3.
Any suggestions?
Thanks again,
/TCP