The official instructions for entering the “Install mode” on the Nokia N800 OS2008 Software update are incorrect. The Internet Tablet Software Update Wizard will tell you to enter the update mode by boot the device while holding the “swap” key down – this will show the USB icon on the top right corner for 2-3 seconds after which the tablet will quit the install mode and continue booting. What you should actually do is hold the “Home” key (the one with a house icon) down during bootup which will put it into the sustained install mode that is needed for the software update wizard to do its magic.
Update: If you are having issues with downloading the update using the Software update tool you can grab the update file from this torrent (N800 only) for a manual install. Use the torrent client of your choice to download the .bin file and tell the Software Update tool to install the file. This file will work only for N800 – N810 users will have to find the image file elsewhere.