Taken from this linkA storage device (such as a memory unit or hard drive) was not found during the software update. Follow these steps:
Join our Destiny clan
Xbox One Unboxing with a special surprise at the endMy Blog
Was my post helpful? Then please click Like below it.
I don't have a storage device, no hard drive
Then that would be why you are receiving the error. If you have a slim 4gb model, perhaps there's not enough room on the flash drive.
Then what should I do. I just bought it
You could buy either a USB flash drive, or an Xbox 360 Hard Drive. Checkout the Xbox 360 storage article which talks about the different storage options available for your Xbox 360. Cheers!
How to use the forums