Mickey,
Regarding your problems running setup_sdcard.sh, you might want to use a USB connected card reader, as opposed to a card reader built into your PC or notebook. The one in my Asus notebook doesn’t play well with Ubuntu.
Another problem might be with Ubuntu (on your desktop) automounting the sdcard. On my notebook, I have to unmount the partitions from the command line (unmounting from Nautilus causes other problems) before running setup_sdcard.sh.
The partition names will vary depending on the card, but to see what (if anything) is mounted:
$ ls /media
Then unmount anything that looks like the SD card partitions
$ sudo umount /media/boot
$ sudo umount /media/Angstrom
Then run setup_sdcard. (You shouldn’t have to run mkcard – setup_sdcard handles the partitioning).
As for getting started with the Angstrom demo image, the easiest way to connect is through a USB connection. On Ubuntu, one option is minicom. If you prefer using Windows, you can use Putty. You can find instructions for configuring Putty to use with the Beaglebone on my blog http://www.gigamegablog.com/2012/01/29/beaglebone-linux-101-configuring-angstrom-linux/
You generally have to press the Enter key once you are connected by USB, in order to display the login prompt. Then login as user-ID root, no password. If you don’t get a login prompt, it might help to reboot it (by pressing the little button on it), to see what messages display during bootup. If you don’t at least get the UBoot messages, then something is wrong with terminal settings (e.g. you are connected to the wrong ttyUSB port).
Angstrom (and Ubuntu) include an SSH server that starts up automatically the 1st time you boot them. If the Beaglebone is able to connect to your network using DHCP, then you can connect to it from your desktop using an SSH client. (You’ll need to figure out what IP address it was given by the DHCP server – if you can connect using USB, then run ifconfig to get the IP address).
I hope that helps,
Dan