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are you plugged into the computer
Is it actually named update.zip

Yes to both.
Ok i have two update.zip on my sdcard one is spelled correctly the other like this update.zip/... i can't apply that one. When i press it, it opens more folders and so on. If i use the other that is spelled correctly i get the same error "no such file or directory". Should i delete and recopy it to the sdcard or does anyone have a better idea?
I've done that several times anyway.
Well my problem has been the update.zip not being found. I've bricked my phone several times so flashing back doesn't bother me. I would just like vanilla froyo, but i can't even update to the leaked version.