I had the exact same issues. I fixed them by renaming the file to update.zip and make sure the update is on top of the sd card. I kept running into errors when I had it inside the root folder. Also if you downloaded it directly to the phone and moved it to the top of the card don't forget to delete it from the previous directory.
For those of you having issues with flash go to the settings menu. Scroll down until you see Enable Plugins. Click that then choose On demand. You should now see download arrows when viewing content online. Click the arrow and play the video.