I posted an easier way of installing apps from Unknown Sources. Post #31 of this thread. I guess nobody bothered to read it.
All you have to do is download the zip file and replace two (2) files and you will have the "Unknown Sources" option in Settings->Applications.
Instructions:
Note: This is only for the official Motorola 2.1 Update. If you're using j_r0dd's Preclair ROM, you already have this.
Allow Non-Market Apps for Backflip users with the 2.1 Update:
Enable Non-Market Apps 2.1
Just replace the files on your phone with the ones in the zip file and set the permissions of the files as stated below.
1. Location: data/data/com.android.providers.settings/databases/
- Permissions: settings.db: rw-rw----
2. Location: data/data/com.motorola.android.providers.settings/databases/
- Permissions: settings.db: rw-rw----