The console can't recognise the smaller update file as you need the larger one, so it generates a generic error.
The small update is circa 300 mb and the proper file is circa 900mb. You need to follow the instructions to the letter right down to the last point to get the larger appropriate file on to your USB flash drive first before you can continue.
I had the issue because I accidentally dislodged power cable whilst removing HDMI cable. The hard drive must have been in action at the time so gave me issues that the smaller pup update file couldn't fix.
So this is the solution.
In order to install the PlayStation 4 system software please follow these steps:
1. Using a PC/Laptop format a USB storage device to FAT32.
2. On the USB storage device, create folders for saving the update file. Using a computer, create a folder named "PS4". Inside that folder, create another folder named "UPDATE"
3. Go to website: https://www.playstation.com/en-gb/get-help/ps4-system-software/
4. Select the option at the bottom of the page titled “Perform a new installation of the system software”. ***Really important***
5. Download the system file using the link in the article, and save it in the "UPDATE" folder you created in step 2.
6. Save the file with the file name "PS4UPDATE.PUP".
7. Turn off the PlayStation 4 by pressing the power button on the front panel. The power indicator will blink for a few moments before turning off.
8. Once the PlayStation 4 is off, press and hold the power button. Release it after you've heard two beeps: one when you initially press, and another 7 seconds later.
9. Connect the DualShock 4 controller with the provided USB cable and press the PS button on the controller.
10. Select option 7 - Initialize PS4 (Reinstall System Software) - IMPORTANT: Deletes all information on the HDD, including the System Software. A message that states a USB storage device containing the System Software must be connected, is displayed. Then you can confirm the selection.
Hope this helps? If so click like.