I had the same problem but figured it out. Use winrar to view the package and make sure it is not called update.zip.zip . If you do it in file explorer it will look right but actually be wrong, so in standard file explorer it really should just say update without the ".zip" but when exploring with winrar it should say "update.zip". Also make sure you format your usb drive to FAT32, not FAT.
The multimedia player is awesome how ever nothing in market is compatible save few junk apps. Also even with unknown sources checked I could not load the hc compatible netflix. Be ready to be patient. So far, using two fingers on pad to scroll doesnt work right. And no netflix sucks for now.
edit: two finger scrolling works but in reverse, like the analog sticks on a game controller, to scroll down you stroke up.
Last edited by Ariq
on Mon Aug 01, 2011 6:18 pm, edited 1 time in total.