I had this same problem. Then I downloaded the ISO update image, attached a CD-ROM Drive to the NAS, used NERO to burn the ISO image.

When the NAS system boots from the CD it says it can determine the sector size and it is assuming 0800. Then after a while updateing starts but ends before it should.

When I try to start from the NAS it tells me it doesn't have enough memory.

Is there some way to reset it ?