Xbox One can install offline update, but won't apply it?

Hi there

I'm currently in the process of brining an Xbox One back from the dead...

It powers up, gets to the troubleshooting menu and I can perform an offline update (of OSU1.zip) from Microsoft's website.

The Xbox One can install the update, reaching all the way to 100%, but then when it restarts it goes to the "Apply Update..." screen and fails at 0%.

Have I set up the hard drive correctly? It's a new 500GB Hybrid Drive. Sadly, I have no working Xbox One hard drive to clone.

Any help?