mtd1 is too small to contain your kernel. You need to either compile a smaller kernel (leave out stuff you don't need) or you need to reconfigure mtds. Which will mos likely mean that you need to reinstall the complete plug as directly after your kernel flash area, starts the root partition.
Thx for the (bad) info ;-)
Do you know which is the smallest kernel that supports ftdi? (Im currently on my home Mac and can't compile a new kernel).