First update phone to 2.0.1 either manually or via Verizon OTA push.
1) Just download this file from your droid browser
2) using a file manager (astro file manager works great) move the file from the download folder to the sd root folder.
3) Open your phone's keyboard. Hold down the letter X key on the keyboard and power your phone on WHILE HOLDING THIS KEY DOWN. You will see the Motorola logo, followed by a graphic with an ! mark on it. At this time let go of the X key and the power button. Press and hold the Volume + key on the side of your phone, then press the camera button while holding the Volume + key.
Now you will be presented with a menu. Navigate to "update" using the D-pad, and click the middle button. Now wait for the process to finish.
These directions are courtesy of Jarek
Now do the following. Download the following files as well.
Once you have all these files downloaded, extract them all into a new folder at C:\Android
You should now connect your Droid to your computer and Mount the SD Card through the phone (A dialogue will pop up on your phone asking to connect your SD Card. Click Mount)
Courtesy of Fadelight:
(go to Device Manager. There you will see your droid (A855) with a yellow "!" next to it. Right click. Select "Update driver" and point it to the android folder. That is where the drivers are.) You may not need these drivers try to first without them.
Once your phone powers back on Go to Settings->Applications->Development and check the USB Debugging checkbox.
Connect your Droid to the Computer again.
Click Start on your computer, and click run. Type cmd in the box, and hit ok. Now type the following, pressing Enter after each line:
adb push su /data/local
mount -o remount,rw -t yaffs2 /dev/block/mtdblock3 /system
mv su osu
cat /data/local/su > su
chmod 6755 su
ls -l *su
(you should see the following)
-rwsr-sr-x root root 76200 2008-08-01 05:00 osu
-rwsr-sr-x root root 76200 2009-05-30 11:28 su
(now continue typing these following lines to finish)
Once you have rooted your phone you are going to want to download the following app from the marketplace. Android Terminal Emulator.
Do not blame me if you brick your phone, I used this method and all of the files above to root my device. let me know if you have any questions.