Newbie having Difficulty Upgrading to 2.3.20

I'll give a brief history before I go into my actual problem:

I have had my Droid 2 for about two months, and about a month ago, I followed some instructions on how to root it (found here: Easier 1-2-3 Droid 2 Root for Windows / Linux / Mac - xda-developers). I did so to get rid of some of the bloatware on my phone.

This seemed to work without a hitch. I had the Superuser Permissions Icon, etc.. Then, I moved on to renaming some of the garbage applications. I don't recall the exact list of apps I renamed, but I did not remove them heavy handedly, that is, I only removed a few that were really troublesome.

Now, the update to 2.3.20 is released, and every 12 hours or so, my phone nags me to upgrade. When I have told it to go ahead and do so, it downloads, reboots, and on start up, tells me that the update was unsuccessful.

I have read that I need to put the update .zip file in the root directory of my SD card, and have done this. But I can't seem to actually apply the patch. How do I go about doing this? And if you can, please be as detailed as possible. I apologize for this request, I am just afraid of screwing anything up.

Is it possible to do a backup of the state my phone is currently in, just in case I screw something up? If so, how do I go about doing this? As cheaply/freely would be great!

I downloaded and installed Boostrap Recovery, made my backup and installed the 2.3.20 update from the .zip file, as found on the page you linked.

Thanks a lot for your help!

So you more or less restore your phone to a factory state every time an upgrade comes out? Should that have happened?