Wait! It actually worked this time! whoohoo!
so:
-Car's sync version 2.1
-Blackberry 8330 Corporate IT policies with PhoneBook transfer DISABLED
I created a phonebook in Sync my phone and prepared a USB key (which was freshly formatted and had nothing else on it) in the application
I then rebooted my blackberry and left the Network connection to OFF but Bluetooth ON (you can adjust auto network reconnect OFF after reboot)
Started the car, inserted the USB key and turned on the radio
Made sure my phone connected to SYNC via Bluetooth
Waited for the car to tell me the key had no media on it, and started the application install
While the application installed I played non-stop with the ball tracker to occupy my phone and in about 5 seconds it had reconnected 3-4 times to SYNC and did NOT reboot!
SYNC said the install was a success and I confirmed that the phonebook I created in SYNC MY PHONE is now present on the car's memory!
Hope this helps someone else, as I have NO CLUE what fixed my issue, hence the complete detailed explanation :)
Dany