You may have root, but you don't have your nand unlocked.
tjones, since your software is the 1.36 (according to your baseband), you can use the following "1 Click Simple root" method. Keep in mind this will wipe your phone, and you will need to reinstall all of your programs.
http://forum.xda-developers.com/showthread.php?t=706411
defaultnoob, not sure what software version you are on (home > menu > settings > about phone > software information. Look for your baseband. If you are 1.36, use the link above. If you are 1.47, use the method below.
http://forum.xda-developers.com/showthread.php?t=720565
After you run the simpleroot methods, you may want to go with WhitSlack's method of starting over. It contains all the latest (before the 2.2 upgrade) radios, etc.
http://forum.xda-developers.com/showthread.php?t=715915
You should now be able to get to the recovery menu, and flash the 2.2 roms from the devs.