[Solved] Unable to flash from update.zip

Hi, I have a problem with my G1, I've been flashing new ROMs here and there as soon as they come out basically. Now, the last ROM I attempted to flash was Drizzy's Modified JACHero ROM updated on July 6th. From then on, my flashes never complete and the G1 continues in the typical HTC/HERO bootloop. I even tried flashing a new recovery image (that didn't work, only way to get it to take was flashing the RAW image from fastboot). I tried flashing a non-hero ROM (Cyanogen's newest release 3.6.2) and it still goes into the HERO/HTC bootloop (whaaa?). So the only conclusion I can come to is that the device is no longer able to take new flashes from update.zip.

However, I have noticed in the recovery menu while I'm trying to flash, the status bar stops moving at:
Formatting DATA:...
Copying files...

After that it jumps rapidly to Formatting BOOT:... to Writing BOOT... then installation complete. Without the status bar every completely reaching 100%.

If anyone has/had this problem and knows how to solve it, could you please please please let me know? Right now I'm sitting with a paperweight... =/ Thanks.

Attempting now... Thanks for the advice. =)
Will Edit with update when I've finished.

OK I downloaded the RC29 and put it on my SD card, but when I try to go into the bootloader to flash it like normal, there is not instruction screen to allow me to update DREAMIMG.nbh, it just shows the fastboot screen with androids on skateboard? How to do I flash it from here? Is there a command from fastboot?

NVM! Thanks rigamrts, I didn't have the SD Card in haha. Got everything fixed and running again. Can't thank you enough for all your help.