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Assuming you are using a windows PC to rename the file you downloaded (update.zip-pe-ermine-0.9) make sure you rename it to update.zip and it is not in fact update.zip.zip - by default windows hides the extensions of known file types. Also make sure the USB stick is formatted either FAT or FAT32 and the update.zip is, preferably, the only file on it.
There are other threads in this forum that detail the process, just do a search.
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