you don't put the file call update.xbe in xboxhdm. you put the file update.xbe BUT it is renamed to xboxdash.xbe to the root of c in your xbox so dump it to c folder in xlinux. From what you wrote so far, I think you need lots of other stuff too for the exploit to work.
Anyway, xboxdash.xbe is to be put in c folder in xlinux
