How to Disable File Verification while installing Cyanogen in Nexus One
In current versions of Clockworkmod Recovery, go into the "Install zip from sdcard" menu and chose "toggle signature verification".



Previous answer:

You're in stock recovery, not CWM recovery.  CWM recovery doesn't verify signatures.  You either failed to install the recovery properly, or you need to hit "install packages" or similar from the stock recovery in order to get into CWM.