Is it possible that you somehow have a corrupt version of the rom update -- did you download from a mirror? Maybe try downloading directly from HTC:
http://216.139.227.230/download/Soft...CS_AM_Ship.exe and flash again.
This according to HTC:
ERROR [260] : UPDATE ERROR
This error occurs when there is an "open port error" before upgrading the CE ROM image.
Solution: You can reset the device and run RUU again. If you still encounter an "OPEN PORT ERROR"
again, reset your computer and try again.