I'm having similar problems. I started with a stock ROM 3.10, and was then able to flash OZ 3.5.2 (3 or 4 times actually). But then... no more. I tried both the initrd.bin/zImage and the original OSPACK image, and get the same results. I've tried several of the suggestions listed here, including a fresh format, checking the md5sum's, leaving the battery out all night, issuing the flash update from the D+P Debug menu. None of them seem to work anymore.
I've seen some mention recently of possible corruption in the updater program, and am following that lead, but have found nothing yet. I'll keep you updated, if I come across else.