I don't know anything about pressing 2 keys being required for an upgrade. I'm not even sure which 2 keys you are pressing, but DON'T press them anymore. Clearly, it doesn't like it when you do that!
Try it the way I said first, and ignore the PDF document. Don't disable your activesync connection at all...you won't be able to connect to your computer without it.
Hard reset, the way I said to first, then sign on to activesync as a GUEST USER - Do not set up another partnership! Execute the upgrade file, and it should install. It will take about half an hour! Do NOT remove the PDA from it's power source during this time. Keep it plugged into a wall socket (the barrel connector) to ensure you don't lose power during the upgrade.
Hope this helps!