You don't have to patch the SMC inside your 7371 dashboard.
You should put the patched smc.bin in freeBoots's bin folder, and then create the hack.bin with:
python build.py bin/falcon_hack.bin bin/smc.bin
Make sure the output from the script contains the following row: * SMC does not include the JTAG hack
If you just run
python build.py bin/falcon_hack.bin
(as stated in the readme), the output will be * Fixing up the hacked SMC code with the target address
and it will not work with Cygnos > 1.01.
Hope this helps.