Try to hard reset the slingbox.
To reset the Slingbox, the user should be on the home network and able to physically access the Slingbox. Hard reset also requires a working Internet connection.
With the Slingbox powered on, press and hold the Reset button on the back of the Slingbox for more than five seconds, until the Network light flashes twice quickly.Slingbox 500 reboots almost immediately and is completely reset after about 10 minutes. Once it reboots then you can go with the setup process to complete the setup.
FYI, it's two years later and their updates won't work. My Slingbox 500 was working for 3 years until I moved and tried to install in the new location. During the set up procedure (not done using a computer, so that was not the problem) it would not recognize that I have a new internet provider and am therefore using new hardware. Therefore I had to do a factory reset as recommended on the Slingbox support website for such situations. Actually I tried two resets with the same results as you: it stalls after downloading the update software. I finally called Slingbox "support". They acted like I was the first to report this problem. After customer rep #1 conversed with another rep she told me that they have no solution, i.e. I have a new $350 paperweight. In my view this company and their products should be totally shunned.