This is probably why it is not booting to CM7 using you're SDcard. You need to install Cyanoboot on the SDcard as well.
Edit: basicly all you have to do is swap flashing_boot.img that is currently on you're sdcard with the flashing_boot.img from cyanoboot. It needs to be placed in p1 of you're SDcard (same spot where CM7 flashing_boot.img resides) download it from the OP. The u-boot.bin and mlo that is included on the CM7 Sdcard you have made will be sufficient enough.
Ok. I am gonna try it tonight, but how the initial successfull booting of CM7 can be explained?