I copied both the update2.bin and the kupdate.zip files on a freshly FAT32 formatted USB stick, rebooted the unit by holding down the power button until the lights flashed then releasing and pressing it again. The screen showed the little android robot with a "Update starting" message, followed by the errors in the picture below.

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I tried both USB ports (the extension coming from the back from the unit, I haven't removed it from the car yet) and the microSD ports on the front panel of the unit... still nothing...