Is your microSD card 2GB or less in size? If 4GB or more, you can't use it. SDHC isn't supported yet.
If you're on Windows, you can just use RUU to flash the ROM.
Download the RUU from here.
http://forum.ppcgeeks.com/showthread.php?t=43266
Extract it somewhere. Put the nbh in the folder and name it RUU_signed.nbh
Then run ROMUpdateUtility.exe
You can do it while in bootloader mode, though I think it'll also work even if the phone's already booted into WM.