On my first install I also got the damaged SD card message. It also meant I could not download anything. I fixed this by booting back to WinMo and mounting the Storage Card as external drive through USB in Samsung Settings. Then reformatted the SD card with MiniTool Partition Wizard. After reformatting, the SD card capacity was reading correctly (it wasn't before), and now I have a fresh install of Froyo with no damaged SD card message.
I hope this helps.
|2.2, android, beta, froyo, omnia 2|