I was freaking out because I couldn't get my rooted tmobile g1 (htc dream) with cyanogenmod to be recognized by MM even though it was recognized before I modded it, it was recognized as a drive under the "my computer" section in MM after I modded it, and the SD card would be recognized if I took it out of the phone and used a USB adapter.
Finally got it to work though so I thought I would post it here. USB debugging has to be turned off for MM to recognize it as a device that can be synchronized. As soon as you plug it in pull down the drop menu and there should be a USB debugging notification. Click on this and turn USB debugging off. Of course, then you have to select "USB connected" on the notification screen and mount the SD card, but you should know this by now because you have to do that to get ANY android device, modded or otherwise, to be recognized by MM.
These instructions should probably be listed somewhere such as the compatible devices wiki for android devices, so that people like me don't get so worried that their phone isn't working.
(These instructions might only apply if you have installed the ADB driver for android on your computer, I am not sure)