I've been having the same problem. I could update from 1.0.0 to 1.0.1, but it would not take the 1.1 update; it just deleted the file.
Oh well. So, I went ahead and rooted it on 1.0.1 (using the minimal nooter method).
Now I can check logcat, and I see an error message when I try to give it the 1.1 update; it complains that the checksum is wrong, so it deletes the Sideload_update.zip file without applying it.
I'll try again from the nook browser. Maybe it was just that bad download link problem...
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