Instructions
Plug any available USB flash drive into your computer. Click "Start" and "Computer." Right-click the USB flash drive disk icon and click "Format" and "Start" to format your USB flash drive to make it ready for updating your Xbox 360.
Download the Xbox 360 update .ZIP file from Microsoft's website. Right-click on the completed file and click "Extract." Copy all of the files that were extracted from the .ZIP archive onto the USB flash drive.
Unplug your USB flash drive.
Turn off your Xbox 360 (if it is on). Connect your USB flash drive to your Xbox 360.
Turn on your Xbox 360. Use your Xbox 360 controller to select the "Yes" option on screen to update your console via the flash drive.