Give it a few minutes for it to read the USB. If the stick is loaded with other stuff it can take a while. When I first put in, it did the same. But wait for the read light to stop and then do the update. Hope this helps. Unless the download file is currupt.
E92 M3 2007 - ///PE with Test Pipes and BPM Stage II; CF Interior & Splitters; CIC with Connected Drive