It may be that /tmp/sideload/package.zip is corrupt or non-existent.
When I rooted my phone, I renamed Jocala's Peach Sunrise ROM to "update.zip" and put it in the root directory of the phone (my external SD card was removed at this time because I was afraid of losing data). Peach Sunrise has ClockWorkMod embedded within it. I then entered recovery mode by holding volume-up while inserting the battery (power button with vol-up did not work for me). Then in recovery mode, I installed "update.zip", and rebooted. You may be able to rename your install file "update.zip" and add it similar to how I did Peach Sunrise.
Now that I have CWM installed, I install new ROMs from the external SD card. CWM is worth it's weight in crack.