Things You'll Need
Instructions
Update with Xbox Live
Connect your Xbox 360 to the Internet if you haven&'t already. You can do this wirelessly or via Ethernet cable.
Create an Xbox Live account if you don&'t have one. Navigate to the Dashboard of your 360 and select "Marketplace." Click "Join Xbox Live." Follow the onscreen prompts to create a profile.
Connect to Xbox Live. If your console is in need of an update, a prompt will appear.
Select "Yes" and wait for the the update to finish.
Update Via USB
Plug your USB thumb drive into a port on your computer.
Visit Xbox online to download the update file (see Resources). Click the "here" link under the "Update using a USB flash drive" section. Save the file as "$SystemUpdate9199.zip".
Unzip the file when it has finished downloading and copy its contents to your flash drive.
Remove the USB drive from your computer. Turn off your Xbox 360.
Insert the USB drive into an available port on your 360 console, then turn it on. The update program will start. Click "Yes, Update Now." The update is complete when you see a new dashboard.