I think the best thing to do is to go into the bootloader screen and flash your device via RSD Lite with a service version of a rom (either 2.1 or 2.0.1 or even 2.0).
Then apply the update.zip again. And remember the Pulsar update.zip ONLY works with 2.0.1 and I think the same goes for the Helix rom.
There is another option available for you which is even better than the Pulsar and Helix update.zip. It is a bit more complicated but works wonders. Flash with 2.1 via RSD Lite, flash with the vulnerable recovery, root, flash the patched boot.img to get rid of the Alarm and Music bug, install Root Explorer and strip your device of the system apps you don't use or need (leave the launcher.apk for now and move all others to a safe folder on your SD card for backup), go to the market and install Helix Launcher or Home++ (whichever you like best), after choosing one of those home replacements as your default, move the Launcher.apk from the system/app folder on your device to a folder on your SD card (for backup). Reboot the device one final time and you have a very nippy device.
For further assistance you can check out the handy guide by craigcrawford1988 for rooting. ->
http://androidforums.com/motorola-milestone/75460-milestone-2-1-update-root-guide.html
Patch ->
Milestone Alarm Fix | Halfzware Shag
You can also flash the latest bootloader which fixed some restarting issues for me. (google for "SW BL customer replacer 9078.sbf").