Visit the market and get the free Android Terminal Emulator installed.
Visit the market and make sure you have Astro installed.
Grab rageagainsthecage.zip with your phone
Use Astro to navigate to the /sdcard/download folder
Long press on the rageagainstthecage.zip file and "extract to this directory"
The 4 files, from the zip file should now be in the /sdcard/download folder (rageagainstthecage-arm5.bin, su, superuser.apk and busybox.
What are we going to do?
Steps 1- 5: Change to the /tmp folder on your phone, copy the file to the tmp directory, change its permissions. run it, and wait.
Step 6: make sure we can proceed
Steps 7 - 14: make system read-writable, copy the superuser. su and busybox files to where they need to go, use chmod to change their permissions, then make the system folder read-only, and exit Terminal Emulator.
If you want to know more about the commands being used here: cd, cp, chmod, mount, and exit are all Linux commands you can look up on your favorite search engine.
Okay, let's do it - type the blue parts in Terminal Emulator
cp /sdcard/download/rage*.bin /tmp/
chmod 777 rage*.bin
This will take some time, just wait for the $ to show up so you know it is done.
Go to Settings > Applications > Manage Applications > Terminal Emulator > and Force Stop the application
Sanity check - Go into Terminal Emulator again and make sure you have a # symbol as a prompt. If so you are ready to proceed.
mount -o rw,remount -t ext3 /dev/block/mmcblk1p21 /system
cp /sdcard/download/Superuser.apk /system/app/Superuser.apk
cp /sdcard/download/su /system/bin/su
cp /sdcard/download/busybox /system/bin/busybox
chmod 4755 /system/bin/su
chmod 4755 /system/bin/busybox
mount -o ro,remount -t ext3 /dev/block/mmcblk1p21 /system