Just in case anyone is still looking for a solution or anyone in the future. I redownloaded the OSU1 files (the exact same files I used for restoring previous Xboxes) and tried to do the offline update on the recent Xbox I acquired. It threw the E106 error and chose the offline update again. I did it a few times before trying a different avenue. After it failed, I took another look at my thumb drive on my pc to see if I downloaded them correctly and noticed I had a $SystemUpdate folder (with the files) inside of a $SystemUpdate folder. I erased the duplicate and ensured that there was only one $SystemUpdate folder with the files in it. It is my understanding that the files must be in a folder titled “$SystemUpdate” in order for this to work correctly. So I ejected the thumb drive, inserted into Xbox and turned it on. Xbox got to 4% and threw the E106 code. Chose Offline update and the files are now installed and it is taking me through the initial setup. This may work for you too. Hope it helps.