This is very confusing.
How is it that you applied the updated binary? The only case I can think of involves this failing at least twice. Once for the initial installation (there's a part in the instructions in big red letters that states "Even though Rockbox starts, the installation is not complete yet. Continue reading and following the instructions to the end of the page!" where you should extract the "rockbox-ipodclassic.zip" archive to the root of the device), and once again during the upgrade.
It certainly sounds as though the fallback image (which doesn't include any codecs, a possible reason for not being able to play any audio) is running to me.
What do you see when you boot the device? A bland, lifeless, solid black and grey screen with a tiny font? Or colourful icons, a yellow menu selector, and a grey-to-black gradient background with the Rockbox logo embedded?
[Saint]