Registered an account to share how I fixed this issue, hopefully it might be helpful to someone.
I bought a used W8400NEX, and when I tried to upgrade firmware from v1.0 to v1.04 I met the same issue. Changed 4 USB sticks and every USB stick give the same update failure error, I realized this might not be a usb stick issue. So I spent some time look at the file folders on the USB drive, and found there's a hidden folder called "System Volume Information" on the USB drive. btw I used windows 10 to reformatted the USB drives.
What I did was manually removed the hidden folder.
