Go into the XPG Easy Update (17150) v0.2 folder, you should see a folder named 17150, go into that folder and now you will see the $SystemUpdate folder in there. Copy that folder to the root of a usb drive and rename the folder to $$ystemUpdate. Put the usb drive into the rgh and the avatar update should load.
Finally found the culprit. The avatar update your gave was not complete. Only 139 mb. Got official update from Xbox and it was 150mb. Installed without a hiccup. Tanx for help!