Im also getting:
-- Install from sdcard...
Finding update package...
E:Can't mount /dev/block/mmcblk0p1 (or /dev/block/mmcblk0)
E:Can't mount SDCARD:update.zip
Installation aborted.
--MOUNT OPTIONS--
Mount /system
Mount /data
Unmount /cache
Mount /sdcard
Enable USB Mass Storage
-------------------------
Well reading the op, I went to mount/sdcard, but keep having the same problem. I go back to the mount options screen and it automatic changes itself back to mount/sdcard from unmount. Any way to keep it from undoing what i did. I have redownloaded, reflash, and keep having the same trouble.
You don't have to mount sdcard. Is your file named correctly, update.zip not .zip.zip?
Sent using the DF app, from a long time ago, in a galaxy far, far away