1. try a different brand of USB drive, format it as FAT32, put the extracted files on it without the zip file
2. none of the updates were supposed to be available over the internet. the directions are very clear that they are to be done by USB only. so it's no wonder they fail.
3. any internet connectivity issues are made worse by your Uverse combination modem-router-gateway. as I have read thru info by Uverse, this is a combination unit, contains McAfee AV software, and others have reported problems using it. in addition, I've recently read a review of the motorola device Uverse uses on Network World and the title of the review has "not too good" in it. the reviewer doesn't have a very high opinion of the gateway. there are much better for home AV use.
ask AT&T for a standard cable-phone modem, get your own router from a well known name in the router business, like Netgear, Linksys, D-Link, etc, and likely some of these issues go away.
I've done 4 updates on an SC-68 with a 8GB PNY drive & every one of them worked just fine. I also do not use wifi but have all my gear on hardwired LAN, using a Netgear router & Netgear switch, and my ability to get files from my network or use internet radio is perfect. I also use the iphone app and it works OK for me.
people tend to blame the receiver for having network problems when the problem may actually be a flaky router or other network issues.
you may have a defective receiver but the use of the Uverse router-modem is probably not helping your cause. btw - the 1st time I read about Uverse problems was not in a Pioneer thread, but a Denon one. so problems using it with a receiver is not unique to Pioneer.