JusRelax: Assuming that the bootloader installed correctly, your dockstar should be trying to boot from USB and, failing that, it should be booting into the regular pogoplug install. However, as you suspected, the 1.2.1 update disabled ssh and since the hbwd service isn't running, it's not able to start it back up.
I'm not sure why your USB device isn't booting, what did you try installing it on? You can try to manually install Debian on a flash drive and then boot off of that. You'll need a computer running Linux and a USB flash drive (not hard drive and not memory card reader).
Format the first partition on the flash drive as ext2. Mount the flash drive someplace like /tmp/debian and cd into it. Then run the following commands:
$this->bbcode_second_pass_code('', '
wget http://jeff.doozan.com/debian/lenny/base.tar.bz2
wget http://jeff.doozan.com/debian/lenny/sheeva-2.6.33-Modules.tar.gz
wget http://jeff.doozan.com/debian/lenny/sheeva-2.6.33-uImage
tar -xjvf base.tar.bz2
tar -xzvf sheeva-2.6.33-Modules.tar.gz
cp sheeva-2.6.33-uImage boot/uImage
echo "/dev/sda1 / ext2 errors=remount-ro 0 1" > etc/fstab
')
That should do it. Plug the flash drive into your dockstar and reboot it. Once you get debian running, mount /dev/mtd2 someplace and then edit /etc/init.d/db and uncomment the last line of the file. This will re-enable ssh on the pogoplug installation.
If the bootloader did not install properly, or if #1 does not work, you can still recover by connecting a serial cable as described here:
http://ahsoftware.de/dockstar/Good luck!
-- Jeff
PS The install script has been updated to fix this problem and the earlier issues reported in this thread.