Are you certain your phone is "dead"? Did you try removing the battery for a few seconds and then powering it back on? From the error message it doesn't seem like your phone went through the flashing process. Did you get this message right away or after a few minutes? Could it be possible that RSD Lite just left your phone in a state where it was ready to receive commands via USB and just waited there indefinitely with your screen powered off? powering on/off might not work in this state
What version of RSD Lite are people using? Which were successful and which weren't? You might want to try a relatively new version like 4.5.5 or 4.5.7.
You could also try uninstalling motorola phone tools, RSD Lite, and P2KCommander and reinstalling them (I saw this as a fix for this same INI missing error message on another thread, but I figure they upgraded RSD Lite after uninstalling and this is what fixed the issue).
@anyone who has succeeded in flashing their phone from Koodo/Telus to Verizon...
Do you have fully working bi-directional MMS?
I see that trevor146, on another thread, mentioned having issues with sending I believe.
If the only thing that really doesn't work is video recording, then you may be able to find a JavaME application that can use the hardware and do capture (not sure of the availability of such an app though).