Instructions
Visit the Xbox system update download site (see Resources for link). Choose "Save File" and press the "OK" button.
Right click on the zipped system update folder that you downloaded and select "Extract All," then unzip all of the items within the folder.
Insert your USB drive into one of your computer's USB ports. Select and drag all of the unzipped files from the system update to your USB drive.
Remove the USB drive from your computer when the transfer is complete. Plug it into one of the Xbox 360's USB ports.
Restart your Xbox 360 and select "Yes" to install the system update when prompted.