z4root no longer works and neither does the ability to download non market apps with 2.2.1. This is the easiest way to do it although there are other longer processes to root your phone which may have not been used on a 2.2.1 Moto Droid. I did a factory reset before I started but that is optional, let's begin.
*** Disclaimer ***
Please make a Nandroid or backup before this just incase.
1. Go to Motorolla's site and downloaded the Motorola 4.8.0 Driver with MotoConnect here. This program automatically downloads the driver your computer needs. This is a MUST. Lots of websites’ and write-ups forget or are vague on this easy step and it makes for a headache. Once downloaded, click on “Update Drivers” and click start. (You can download the driver file and wait for your Hardware Manager to pop up and go that route or just take the easy way and do this)
2. Download the latest version of Superoneclick and follow its directions on how to install it, you can find it here.
3. Connect your phone with your PC via USB. Make sure that USB debugging is ON. I removed my SD card to be on the safe side but if you choose not to, make sure you do not mount the SD card.
4. Open the Superoneclick program after un-zipping it, in Administrator mode. Follow the directions, there is even a video on how to do it. After your phone is rooted, click on " Allow non market apps ". Superuser should now be installed on your phone in your app's list.
*** The newest version of Superoneclick install BusyBox along with Superuser. Open your app drawer and look for these two. If both are there, you are done! If not, continue to step #5. ***
5. Disconnect your phone from your computer and restart your phone. It's not needed but, it's best to start with a fresh restart.
6. Go into your market from your phone, download Busybox ( free app ) and run it. Once installed, make sure within the app it states that your phone is rooted and the latest version of Busybox is displayed.
7. Restart your phone, this step is a must.
Your phone now has root access. You can download non market apps as well. I use Titanium Backup to remove bloat and such but you can use your favorite file manager.
Why the OTA 2.2.1 made things disfunctional, I don't know but this is my little solution and hope it helps.