You know, it strikes me as funny. This is exactly the kind of thing I ran into all the time in PC development projects.
Your developers build a kick a$$ product that works flawlessly on the office equipment. Get it out in the wild and it acts different ways on different customers' boxes, as if each had its own personality, even though the parts are mass produced somewhere in China.... HMMM ... go figure...
As for my update experience, I found just the opposite scenario. I did the HDD upgrade, it found the file, but never rebooted. I just manually rebooted after a few minutes of sitting there and 1.1 came up on the screen. Totally weird how we all have XBOXes with the same modchip and the software acts so different for each of us ... HMMMM.... *scratches head and saunters off*