"Incompatible Version" indicates that you didn't extract the contents of the zip file properly. Check if you have a rockbox.ipod file in the root (and remove it if it's present) and make sure you overwrote all contents of the .rockbox folder.
Rockbox freezing sounds pretty much like an outdated bootloader -- you might want to update your bootloader instead of downgrading. Downgrading is never a good solution anyway ...