If you run into the same problem, just manually install Froyo. This is what I did:
1. Download the official Android 2.2 software from Google servers
https://android.clients.google.com/updates/voles/signed-voles-FRG01B-from-ESE81.e48e48ff.zip (SAVE A COPY TO YOUR DESK TOP OR PERSONAL SD CARD TO SAVE TIME ON YOUR NEXT FIX)
2. Copy the file to the customers microSD card ( use USB cable if not stuck in incomplete wake up/card reader otherwise) and name it “update.zip” (Note: not update.zip.zip)
3. Power off your phone, holding down the “X” button on the physical keyboard and power it back on to boot into recovery mode.
4. When you see the exclamation point in a triangle symbol “/!\”, press volume up and the camera button to display the recovery options.
5. Use the d-pad to navigate to “apply sdcard:update.zip” and select it.
6. When you see “Install from sdcard complete”, select “reboot system now”.
That’s it…just add the Gmail and stuff and your done!!
It sounds like a lot of work but if you follow these instructions should take about 10 min..