wolf1255,
I had the same issue and thought nothing was happening because, for some reason, it doesn't handshake with my AVR/television until the whole process has completed. The only thing that shows up on the TV is a message something like "incompatible video signal." It looks like nothing is happening but you just have to be patient and, when it's done, the screen will light up again with the X3D boot-up screen.
I do agree with you that it's annoying to go through the entire emergency procedure, first saving your config file, then restoring it afterwards. I also agree that the process could and should be made much easier, even over the internet if possible like most blu-ray players today. Strangely, on the X3D setting screen, there IS an option listed for "USB Update" but they never suggest we use that for some reason.
So next time you're doing an update, follow the emergency procedure like you've been doing (put the stick in, turn the player on while holding the power button down for 10-15 seconds and, whatever you do, don't interrupt it), this time be patient. After a few minutes (seems like about 5 minutes), it WILL install correctly but, yeah, you won't know what's happening until the screen comes back on. I have an older TV downstairs and another Mede8er X3D connected to that TV (through an AVR, same as the other), and that TV shows the update process with the progress bar and everything. But my newer TV shows the "incompatible video" message during the entire process for some reason. But I assure you it IS updating, even if you can't see what's happening for about 5 minutes.
Good luck,
~ Larry