i downloaded the image file (http://qole.org/files//debian-m5-v3b.img.ext2.lzma) and extracted it and put it in MyDocs
when i open easy debian installed it goes straight to downloading the image file, what did i do wrong?

Have a look for the filename in the config-file at ~/.chroot, lzma is compressed. try uncompressing...

i decompressed it and moved it to MyDocs
now i habe 2 files one is 283 MB .lzma
another one 2GB .ext2
both on MyDocs

Should work now? Have a look at the configfile, esspecially path and filesystemtype!

u mean /home/user/.chroot ?
i just renamed the img file for the same name in the config file
ill double check

You have the possibility to choose ext2 or ext3 and some more options i guess as filesystem for the image (or even partition which is much faster). Yes, config file is located in /home/user/.chroot where you have to define path / filename and fs-type of the image / partition.
Btw, i'm using the Mer0.17testing11 image on a 5GB-partition at internal eMMC: Netbeans, Kile, Gimp, Inkscape, Abiword, Gnumeric and Dia are running well...

WOW thats too much info
i havent repartitioned my N900 its eMMC 32 gig...default
should i change the extention of the image to ext3?

No, either change fs-type in configfile or convert the image with a tool!

in .chroot , IMGFS=ext2
filename .ext2

Sample config for chroot

# Device or image containing Debian filesystem.
# Default: first in /home/user/MyDocs/debian*.img*, /med
# Some examples:
#IMGFILE=/home/user/MyDocs/debian-squeeze-m5.img.ext2
#IMGFILE=/media/mmc1/debian-squeeze-m5.img.ext2
#IMGFILE=/dev/mmcblk1p2
#IMGFILE=/dev/mmcblk0p4

Filesystem used; must always be set when using a parti
# Default: from extension of IMGFILE, or ext2.
#IMGFS=ext2

# Mount point for Debian.
# Default: /debian
CHROOT=/.debian

# New /tmp dir size for printing / PDF creation
# Default: 6M
....

Should work now, maybe reboot required? There is also a much bigger thread about this topics...