Does your recovery look like the one on the screenshot or do you have the mini recovery?
You're supposed to push the rectools files to your sdcard. I found this way is alot easier:
- Boot into whatever rom you have running, connect to the pc, and mount the internal storage (drop down the notification bar and click the 'usb connected').
- Copy the RECTOOLS.tar.gz file the root of the internal storage
- Copy the update.zip to the root of the internal storage
- switch off the phone, then boot into fastboot (call button + power button)
- flash the recovery image over
fastboot flash recovery recovery.img
Now the rest all from recovery:
- Reboot into recovery (volume down + call button + power)
- backup g.apps
- wipe/factory reset
- apply the update.zip
- restore g.apps
- reboot
all done