try updating with a usb drive
Copy the Update to a USB Flash Drive
If you don't have an Xbox LIVE account or have a slow Internet connection, using a USB flash drive is a good option.
Note: The USB flash drive must use the FAT32 file system.
Update using a USB flash drive:
- Connect your USB flash drive to a USB port on your computer.
- Click here to begin downloading the update folder. Save it as "$SystemUpdate.zip" anywhere on your computer.
- Unzip the File.
- Copy the contents from the unzipped folder onto the root of your flash drive.
- Safely remove the flash drive from your computer and plug it into a USB port on your Xbox 360 console. If your console is on, turn it off, then back on. The update program will start automatically.
- Select Yes, update now. When you see the new dashboard, you're done.