Got past the update loop by doing the following:
First I removed the previous 13599 update from the usbstick, (just to make sure) and extracted the 13599 again. It still game me the same error.... But, when i re-inserted my copy of Fifa 12, it seems to have triggered the update from the usb stick! Eventually, I got back into the dash

Also, if i removed the stick, it stopped, so the update itself didn't continue from the dvd... only trigger was triggered by it! (I think)
I only need to reflash to LT2 tomorrow
