1. Install ec2-api-tools from http://s3.amazonaws.com/ec2-downloads/ec2-api-tools.zip on the failing instance
2. Install Java from http://javadl.sun.com/webapps/download/AutoDL?BundleId=39484 (I’m using a small instance)
3. Set .bashrc as follows:

export EC2_HOME=~/ec2
export PATH=$PATH:$EC2_HOME/bin
export EC2_PRIVATE_KEY=$EC2_HOME/pk.pem
export EC2_CERT=$EC2_HOME/cert.pem
export JAVA_HOME=/usr

Run :

source /root/.bashrc

4. Create a directory for the bundled files (/mnt/myimage in my case)
5. Bundle the actual instance using:

ec2-bundle-vol –cert ec2/cert.pem –privatekey ec2/pk.pem -s 2048 -u Your_AWS_Account_ID -d /mnt/myimage/

-u : AWS Account ID is taken from AWS page Security Credentials, e.g: 1234-5678-9012-3456. Make sure to skip the “-” when using it.
-s : size of the image
-d : directory from step 4

6. Upload the files to a S3 account using:

ec2-upload-bundle -a access_key -s secret_key -b bucket_name –manifest /mnt/myimage/image.manifest.xml

-a : access_key from Security Credentials page
-s : secret_key from Security Credentials page
-b : bucket name
–manifest : name of the manifest file

7. Register the AMI by going to your AWS EC2 console->AMI->Images->Register new AMI and enter:
bucket_name/image.manifest.xml
8. Create a new EC2 instance by using the newly registered AMI

Note that you will need the [pk,cert].pem files too.

export AWS_ACCESS_KEY_ID=your_key_id
export AWS_SECRET_ACCESS_KEY=your_secret_key

Note : older versions of s3sync had : AWS_ACCESS_KEY ..so dont forget to add : _ID

You can create a script like :

#!/bin/bash
export AWS_ACCESS_KEY_ID=your_key_id
export AWS_SECRET_ACCESS_KEY=your_secret_key

s3cmd listbuckets

This will show all buckets you have on your S3 account.