olimex board using iar examples
The feedback "CMD_PREPARE_SECTORS" seems to be coming from the on-chip bootloader of the LPC2129. Is there a chance that you call IAP routines? If so, you need to call the IAP routines with the actual CPU frequency, e.g. if you activate the PLL, the IAP call needs to be external frequency times PLL factor.
IAR, J-Link and LPC2129 is a well tested combination and we need to find where the handling needs a change.
This is a long shot but may be it helps
Bob