I am having the same problem as you do. I had a stock Milestone. I fully rooted it through SuperOneClick. I wanted to install CyanogenMod so I had to flash it with the recovery SBF.
I have installed the latest motorola drivers and RSD. I boot it using Up on D-Pad and power, plugs it to computer. The flash drivers shows a successful installation.
I open up RSDLite with administrator rights. Still, it doesn't recognize my phone. I tried it on every way I could imagine. Open RSD first, after; plug first, after.
My battery is fully loaded.
My device is a rooted Milestone running on Android 2.2.1.
It has superuser installed and has been flashed with ClockworkMod 126.96.36.199 using ROM manager. That was because I wanted to backup my stock ROM aswell. It doesn't work either. After booting it shows the yellow exclamation mark and freezes.
What else could it be? :/
Thanks in advance