Unfortunately, the update comes at a price, as there’s no Wi-Fi support in the current build. The reason for this is because the original kernel has been replaced to protect the identity of the source. However, if that’s a price you’re willing to pay, head over to the source link and try out Froyo for yourself!
The update itself is a Nandroid image (have a look at our Nandroid backup/recovery guide here), which means you need to have an already rooted Droid, with recovery flashed. Check out this guide for more info about custom ROMs.
Disclaimer: At this time the kernel has been changed to protect the original source, (you loose wifi) The original file has everything working at this point in time.
These files are nandroid backups. You must download them, extract them, and then place in the appropriate folder.
ROM is already rooted with new SuperUser installed.
As always, install at your own risk and report back with your experiences.
Source: My Droid World