Problems installing on the NAS320

Go gentle with me folks, as I am a bit of a technophobe newbie with servers.

I'm using the packaged software to install serviio on my DLINK NAS320.
At first everything seems to go alright.

I install Fonz fun_plug script.
The goal is to enable telnet to the DNS device and download the files:
http://www.inreto.de/dns323/fun-plug/0.5/fun_plug
http://www.inreto.de/dns323/fun-plug/0.5/fun_plug.tgz
and put them to \\DNS-device\Volume_1 as indicated in the read me notes.

Then I edit the fun_plug script changing all versions of /mnt/HD_a2 to: /mnt/HD/HD_a2
I make a copy of the fun_plug script with name: "fun_plug.ffp and reboot the server from the web interface.
I follow the instruction to install prebuilded Debian Squeeze.
I try to unpack two files:
fun_plug.debian
Serviio_061.tar.gz
and put them to \\DNS-device\Volume_1

however,around 50% of the serviio unpacking I get the following message:

Cannot create mnt\root\lost+found

As the unpacking reaches around 97-98%, I get a list of errors which state:

Ignoring these rules, I try to telnet to the device using putty. Putty tries to connect with my server, a black box with a green square appears in a cmd box and then closes down with an error sound.

Can anyone guide me to what I am doing wrong?
So far, I can't seem to get it to work no matter what I try so any help would be most appreciated.