I had the same error. I found that putting the pandora battery in first for a few seconds (only battery light is on) then inserting the MMC, it does boot to the downgrade menu everytime. It shows loading and a complete install, then still never boots with a normal battery. When I attempt to back up my nand, I have 2 bad blocks. Anyway to repair these so my downgrade flashes correctly? I have a feeling that my flash isn't installing correctly even though it says it is.
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