As I mentioned above, I have done that. I actually got it to start patching this morning, it was rolling much further into it (500 MB) when it stopped again. It stopped immediately as I turned my X-Box (Live) on to play while it patched, so there may be some interference running there.
I removed the X-box from the network, reset everything and tried again, and continue to get the same error. I'm determined to get this working, just hoping someone will see this and have an idea I haven't already tried.