From nookDevs

Part of the NookColor portal

First, download an ext4 compatible bootable SD recovery from [http://forum.xda-developers.com/showpost.php?p=11447175&postcount=1]. You'll need about 100MB of space on the SD card for the CM7 and gapps ZIP files. Don't forget to verify that the MD5 checksums of the files you downloaded match the checksums in the XDA post.

Unpack the archive:

tar xvzf XXX_clockwork-0.1-ext4.tar.gz

This will create a raw image file in the current directory named 'XXX_clockwork-0.1-ext4.img', where 'XXX' is the size of the SD card image you chose to download. Follow the instructions in step 3 at [https://nookdevs.com/NookColor_Rooting#Steps] to burn this image file to an SD card.

Next, download a 'flashable' ZIP archive of CyanogenMod 7 (CM7). The best source for these is [http://download.cyanogenmod.com/?device=encore], directly from the cyanogen(mod) mirror network. 'encore' is the internal code name used by Barnes & Noble for the NOOKcolor, and any image built for the 'encore' should run. As of late February 2011 there are no stable releases of CM7, and changes are applied every day. Choose the latest nightly build to get all the fixes and latest features. You'll also want to download Google apps (gapps) from [http://wiki.cyanogenmod.com/index.php?title=Latest_Version/Google_Apps]. Be sure to verify the MD5 checksums of the files you download!

Both of these ZIP files need to be *copied* to the SD card you burned earlier. Do not use imaging software to do this, just mount the SD card normally and copy the files over. After this is complete, safely eject the SD card and put it into your NOOKcolor. Reboot, and the NOOKcolor should display the CWR menu, version 3.0.0.6. Volume buttons move up and down, Home (N) selects/confirms, Power goes back. You'll need to do several things from the menu to install CM7:

• Under 'mounts and storage', format system, data, and cache, do NOT format boot!
• Under 'install zip from sdcard', 'choose zip from sdcard', apply both ZIP files you downloaded earlier

When the last ZIP is done installing, remove the SD card and reboot. Your NOOKcolor should now be running CyanogenMod 7!