Have you tried giving the Slingbox a soft reset (tapping the reset button on the back of your Slingbox), and trying the update again? If not, that's the first thing I would do if I were faced with this kind of issue. If that does not work, I would try giving the Slingbox a factory reset, and get it set up again from scratch. Here is an article on doing a factory reset if you need it:
Hope this helps!
Alas, there is probably no help for this unless you are still under warranty. 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 Slihgbox support website for such situations. Actually I tried two resets with the same results: it stalls after downloading the update software. I finally called Slingbox "support". They acted like I was the first to report this problem. And after customer rep #1 conversed with another rep she told me that they have no solution, i.e. I have a new $350 paperweight. This company and their products should be totally shunned.