Like Metfanant said:
1. SBF back to Froyo
This page
Complete Droid X .sbf Flashing Guide is what I used.
It has very detailed instructions and all the files you will need.
2. Root Froyo with z4root
This is simple - just install the z4root app on your phone and run it BUT you can't get it in the market - just google z4root.apk and you will find it. (put it on your sd card then open it through the files app and it will install just like through the market)
3. Install the Droid 2 bootstrapper (NOT the Droid X bootstrapper) from the market. Run it and click "bootstrap recovery" and it will install its hack. Then click "reboot recovery" and phone will reboot into recovery.
Now you are in recovery - this is where you navigate with the phone buttons (volume is up and down, camera button is how you select).
4. Flash the 2 part rooted GB
Navigate to the page below and scroll down to the "File Part 1" and "File Part 2"
Official DX Gingerbread 2.3.3 (4.5.596) Release Thread - Something for everyone
Save these two files to your SD card.
Now back on your phone, navigate to the part 1 and select it.
It takes a few minutes at least to install and then tells you to install part 2. Don't back out of recovery until you install part 2.
That's it. Reboot phone and you're done, it will boot up and look like you just took it out of the box.
As far as the wifi tethering, same advice from me, I don't use it but I know it can be done. However it is somewhat of a moral gray area because it can be argued strongly both ways, so if you want to do it, it's not hard to find it if you search.