I think that a full installation should work, unless there are settings on the current system which you'd like to keep. There should be an option in the recovery menu to do a full erase of the internal NAND.
Regarding the Wifi option, it's strange that it doesn't work even with an open network. Does your Zaurus see the network at all? Make also sure that your router supports the old 802.11b protocol, if not you might try sharing a wifi connection with a phone.
Varti