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What app do you use so that "sent from my rooted nook color"? is inserted at the end of the post?
Put the downloaded .img on the desktop. Open terminal. type (no quotes) "cd Desktop"
Now when you type in the dd comand it should work. The problem was that the OS did not know where to 'find' the input file (your downloaded.img). Since it is on the desktop, and your terminal is now working from the desktop (cd Desktop) it should now work.