Again, an obvious one, but if you are using the wireless connection on the Xbox One and receiving an error, try a wired connection via Ethernet.
If there is a known issue on its end, Microsoft will have a status alert. If the issue persists, check the Microsoft Live Status page.
If you are having an issue with downloading the update, it may simply be a problem on Microsoft’s end, including too many users trying to update at once or server maintenance. Obvious maybe, but any connection interruptions could derail the entire process.
Before you contact Microsoft, there are a few steps you should try first. Regardless of the cause, the result is a system that doesn’t work properly. This could be an issue with the Xbox One, a problem with your internet connection, or even something on Microsoft’s end. When this occurs, the Xbox One won’t be able to access the majority of Xbox One features. Some users have reported issues during the mandatory update phase. The company’s support team is arranging replacements, and in some cases will ship a new console with a game of your choice to you before you send your system in.
Try an Xbox One game, music CD, or a movie on a Blu-ray or DVD.” Thankfully, the issue is only present on the original Xbox One. An error message then reads, “Sorry we can’t play that disc. When you put a disc in the console’s optical drive, it makes a grinding sound. This problem is something that a number of Xbox One users have reported, but thankfully, they also report that it doesn’t actually damage the disc.
Plug in your USB stick and select Offline System Update. Back at your Xbox One, perform the same button combination described above to boot into the troubleshooting menu. Download the update file from the Xbox website previously linked, and copy the $SystemUpdate file to the NTFS-formatted USB drive. In short, though, you need a USB stick formatted to NTFS, the same file system Windows uses.
You can find full instructions on the Xbox website.
The improvements to storage space management will make it easier to see how much space your content takes up, and allow you to control your install lineup and download queue. If you're using the Xbox One's "Instant On" feature, the console will check for updates next time you turn it off and begin downloading the update at off-peak hours in your local time.
The Xbox One February update that adds the ability to see and manage your storage space and brings back the controller battery power indicator has started to roll out, according to Major Nelson's blog.