If you have cpu key and 2 dumps of working nand you can use j-runner to create retail image(but lowest in j-runner is 14699 i think - so you would update to 14699 staright away)
But i think we are missing something very simple here cos your xbox should finish updating with usb drive without a problem. Personally i would start from scratch:
1.format usb drive to fat32
2.copy ms update 13146 to it (only one folder $systemupdate) nothing else on usb drive.
3.plug usb drive into xbox and power on
do steps 1,2,3 with dvd drive flashed with lt+3.0(orig-02510C-1c000 from post 13146 folder) and if this doesn't work flash drive to lt+3.0(LTPlus-0251-v3.0.bin)
This should work.
Creating nand image and flashing it to your xbox is kind of reinventing the wheel and you can run int LDV issues.