Ok, well, I don't know much about this, but once I figured out that in the SDK folder, together with ADB there is a tool called fastboot
So, open cmd.exe and type cd <path to your fastboot.exe folder>
Now on, if you type fastboot you will get a list of available commands.
The fact that your phone starts with that message should mean that your recovery (and boot aswell) cannot start. So, you should install a boot from fastboot tool (I GUESS, as I never had the chance to try it).
Another chance (which is lot easier) should be to use KDZ Update. So, search on XDA or Google for the KDZ tool and a .kdz update file for froyo 2.2.x
Then, connect your phone to the USB and disable LG modem from your control panel.
Open KDZ and select "3GQCT" as Type and "DIAG" as phonemode. Then select your .kdz file and start. The program will detect your phone and install the system + boot. It should work. If it doesn't, do it again with EMERGENCY as phonemode.
Just one recommendation, if the update fails, DO NOT UNPLUG THE PHONE AND DO NOT UNPLUG YOUR BATTERY or there will be a real chance to brick the phone.
Hope this helps, the second way worked for me, even if after a day i bricked my phone lol
EDIT: ciaox just made a VERY useful guide that you should follow to fix your phone. Click on this
LINK