I had a lot of problems with this, but I did get past it, so I wanted to put my experience out there for anyone having the same issue.
For those who don't know, some users experience a hang in the final stages of the official update tool. After hitting the "Start Download" button, the status bar goes:
.. and then just hangs. The first time this happened to me, I just thought it would just take time, but after leaving it to its own all night, no progress was made.
The consensus I found was that you simply need to keep retrying. Success stories ranged from PC reboots, to update tool uninstalls, to battery pulls and cable unplugs. I got it done with the later, and I'm pretty sure that, driver conflicts aside, it's the only thing that is really required.
I think the reboots and tool reinstall only work because there is a random chance that the connection to the phone will be established properly, so rebooting/reinstalling is the same as retrying from the "Start Download" screen, only it takes longer because you start from the begginning.
The problem with restarting from the "Start Download" screen, however, is that if you simply unplug/replug the USB, windows detects the phone as an unrecognized device. At first, the only way around this I could find was to reboot the whole update tool.
The trick I found was to power cycle the phone every time I unplugged the cable. In pretty list format:
- Unplug the USB (Update tool displays error notification)
- Remove the Battery
- Reinsert the battery
- Hold Camera+Volume Down+End (to boot to the download screen)
- Press "Start Download" Button on PC update Tool (when it becomes enabled aka not grayed out)
- Wait 5 seconds after "[Debug] SetupConnection" appears
- If the status doesn't change, repeat from 1.
It took me about 3 tries before it took successfully. When it finally worked, the status "[Debug] SetupConnection" changed to some random question mark jibberish almost immediately.
This worked for me on XP SP3. I hope it helps others as well.