es muy facil ese metodo ayer un amigo lo probo y se resolvio el problema del wifi, es asi format boot,system,cache, data, todo seguido uno del otro sdcard no porque alli esta el zip, te sales de ese menu te vas a dalvik y borras, y enseguida aplicas el zip
well personally i dont have my sd partitioned and ive been using Froyo since it was first stable.
it never hurts to have a partition though, unless you have a 2gb memory card like me lol but in general no im pretty sure you dont