I faced the same problem few weeks ago also. But I solved the problem using this IOS:

c2600-is-mz.120-5.T1.bin
Group-
 
I have 2 2924 and a 2620 I am trying to practice routing between VLANs.  The trunk between the switches is okay.  When I create the sub-if on the router and try to run encap isl 2, it barks at me that this is an unrecognized command... ie "encapsulation" is not a valid command.  I am running 12.0(3)T3 code on the router.  Am I just missing something obvious?
 
Thanks
 
/Jared
 

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