Yeah, the FCs indicate something (.apk or .odex file) got borked in your /system partition...
I'm thinking that it might be best to download xtrSENSE 5.0.1 and flash it while you can still get the trackball to cooperate.
Then you can get the trackball-optional recovery installed via the app I linked above. To install and run that app, do this:
1. Download the one-click-tbo.apk app from the above link and install it (you'll have to enable "Unknown sources" in Settings -> Applications -> Unknown sources checkbox selected; while you are in the Applications menu, select Development and make sure USB debugging is also checked.
2. Navigate with a file manager (like Astro) and short-press the one-click-tbo.apk and install via the app manager.
3. Run the app, read the disclaimer, and press the button
4. Power down your phone and then power it back on (i.e., reboot)
5. After the phone reboots, then you'll be able to enter Amon_RA's custom recovery and won't have to rely on your trackball to navigate there
I would suggest grabbing Quick Boot from the Market--its a free and awesome app that you can use to enter custom recovery, power down, and reboot right from the app.