I was able to update the firmware with no issue, as were many other users. I'm happy to try and help out. Just to make sure you're following the correct steps, I've bolded important parts that are easy to overlook:
- Format USB storage device as Master Boot and FAT (or FAT32).
- Download and unzip the update file.
- Copy/Paste the update file (.upd) to the USB device. This should be the only thing on the USB on the device.
- Ensure that XDJ-XZ is powered off and no USB storage device and USB cable is connected.
- Turn on the power while pressing both the [USB1 STOP] and [RELOOP/EXIT] buttons simultaneously.
- When the ”Connect USB storage device into top USB1 port.” message is displayed, please release your finger from the buttons.
- Insert the USB storage device containing the copied update file into the USB1 port on the right side. DO NOT insert the USB storage device or other USB device into the USB2 port.
- The update will load automatically. Do Not remove the device or power off the unit.
- When the complete/finished message is displayed, turn off the XDJ-XZ and turn on again. You can check if the version updated by going to Pressing the [MENU(UTILITY)] button for over 1 second to open the [UTILITY] screen. Then Scroll the screen by turning the rotary selector to show the version number on the bottom of the screen
If you find that it's still not working, it could be an issue with your USB external drive. Not all drives are created equal, so repeat the steps with a different USB storage device brand. For what it's worth, I used a SanDisk Ultra and everything worked fine.
Cheers.