Just curious....are you doing the update with Axe Edit? I've found using the Axe Edit software has been the method with the least amount of hassle. You probably already know this but I'll toss it out there just in case.
1. Download the firmware upgrade file from Fractal Audio Systems Support . (it's a zip file)
2. Unzip the zip file in a folder of your choice. i.e. 'My Documents>Fractal Axe FX>Firmware Upgrades'
3. Connect your Axe FX II to your computer via USB.
4. Launch the Axe Edit software and confirm you are connected by looking in the top header bar of Axe Edit and that 'Axe Edit - Status:' shows 'Axe-FX: II' and an ID number. If not, choose 'Settings>Audio/Midi Settings' and from the 'MIDI' tab under the MIDI Input and Output drop-down menus, choose 'AXE-FX II MIDI Out' and 'AXE-FX MIDI In' respectively.
5. Next, back up your Axe FX by choosing 'Settings>Sync and Backup'. Now you're ready to install the firmware upgrade.
6. In Axe Edit, click 'Settings>Update Firmware'.
7. Navigate to the upgrade file in the folder where you unzipped it in step 2 above. Select the file titled 'axefx2_3p03.syx' and click OK. You will be prompted to prepare the Axe FX for the file transfer. (Read the instructions)
8. From the front panel of the Axe FX II, select the 'Utility' button and use the 'Page' buttons to navigate to the 'Firmware' tab. Press the enter key of the front panel of the Axe FX.
9. Next, in Axe Edit, click 'Send' in the pop up window displayed in step 8 above.
10. Wait until the file transfer is complete. Do not interrupt the process. This should only take a couple minutes or so. Once the transfer is complete, click 'OK' in Axe Edit.
11. From the front panel of the Axe FX, press the 'Utility' button and navigate to the 'Reset' tab. Press 'Enter' to reset the system parameters. This resets certain parameters to factory default so if you made any changes to the I/O menu, such as 'Copy Output 1 to Output 2', you will need to reconfigure those settings.
12. Power off the Axe FX momentarily, and then power up again.
You're ready to rock!
All your presets should remain intact, ready for unrivaled entertainment.