The update for Kinect launch is screwing with things. I fixed mine by going into System Settings, Network settings, then running a test on xbox live. Initiating the test logs your profile out then runs a network test. The test completed with no problems and then asked me if I wanted to update again. Without logging back into my profile I clicked OK and the update ran without a hitch. I think the solution lies in the fact that my profile was logged out and from what I have seen, the only way to connect to xbox live without a profile being logged in is with a network test. Once you connect to xbox live it senses that you don't have the update and asks you again, this time without a profile logged in and you are able to do it.
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