Yeah just tried that now. Same thing update failed.
I had to rename the update file to update.zip. as when it was named just update the box didn't see the file on the usb stick.
I'm using the local update from the settings menu in the software is that right?
Yes that's the correct method.
The file when downloaded from our FAQ link should be called 'update.zip'. It doesn't need renaming. It definitely works, I just tested it on Q5 with 3.0.2 firmware.
Are you sure you have 3.0.2 firmware? Where did you get the box from? Us?
If all else fails I would try reinstalling 3.0.2 firmware using reset button method and then immediately doing the update to remove bar.