Hmm... that's not good. Since I haven't heard of this from anyone else, I'm guessing this is something specific about your system, though I wouldn't have the first idea what.
Crazy random ideas:
* Clear the cache ( http://vgstrategies.about.com/od/xbox36 ... 0Cache.htm
) and re-download the update?
* Move the game to another storage device and try running it from there?
* Clear the cache and run the game and don't agree to download the update, and see if the game runs. (The update is mostly to add warning messages about autosaves, so if you're careful to manually save, you don't really need it if you're willing to play offline)
* Contact Microsoft support and ask for help?