Out of curiosity, why are you trying to downgrade? There are no downsides to 4.0/4.1. Menu 4.x is just as hackable as 3.2 (and the process is actually considerably easier), plus you have the added benefit of the SD card menu. Why go back?
Also, for future reference, it's always helpful to be more specific. If you're going to say something like "when I get to step 7c", you should really tell us, step 7c of what? Which guide are you using? A link would be a great help to those who may help you.
Also, I had this problem ages ago. It's definitely fixable... I just can't recall what the culprit was at the moment. I know you'll get that message if you have 80 tons of tickets installed, but I doubt that's your case, and it wasn't mine. If nobody else manages to solve your problem before then, I'm sure a quick search later this afternoon (once I'm out of work) will find what I did.
EDIT: After looking at Edhel's post above, I do seem to recall that it was DVDx related. It definitely wasn't the Backup_Launcher folder in my case.
