I have the same problem (program application database cannot be found) with my HTC Touch Diamond. I've changed al lot of things in de sys.txt file but it doesn't work. I'm from the Netherlands so Internal Storage = Intern geheugen and My device = Mijn apparaat.
I tried things as:
app="\My device\Internal Storage\iGO8"
app="\Mijn apparaat\Intern geheugen\iGO8"
But none of them worked. So could someone please help me?