Just to be clear, what are you renaming your file to? It needs to be renamed to "EP201_768_SDUPDATE.zip" and on an SD card formatted to FAT32. Also, if you're working with a .zip you downloaded from ASUS, you need to extract that zip and rename the EXTRACTED zip file and place that one on the SD.
I'd also try a different SD card if that's not doing it for you. "E: failed to mount /SD card (no such file or directory)" already sounds like it's just not liking that particular SD card right now.
You could also try to download JB from ASUS and flash that file instead of ICS. That way, you will have your fastboot option back so that you can send ICS via fastboot, re-root, and upgrade. That's what I did when I was going through this yesterday trying to reroot after I was bricked.
Once you've over come that part, on to the rooting (and keeping root). It wasn't working with the JB from the ASUS site. I was able to flash it, but I kept losing root. I had to use the dlpkgfile method from my OTA to upgrade to JB in order to keep root. If you don't have that file, you can find one somewhere here or I can provide you with mine.
Good luck!