Great work getting this resolved guys!
I just wanted to speak to this issue briefly. I'm surprised to see this error cropping up after this release. Generally, this only happens with the Zune device has a newer firmware version than the software. So, a device with 3.1 firmware connecting to software version 3.0 (or earlier) will give the "read error". They way to get around this would be to upgrade the software on your PC to the 3.1 version so that they are in parity.
One might ask "How could you get into that state, don't you have to upgrade your software before the device?" Yes, that is true, however, let's say you upgraded your software on your laptop, then connected your device and upgraded it as well. Then later, you connect your 3.1 device to your desktop running 3.0. Bam, read error.
We have fixed this issue for the next release, but in the meantime, upgrading your software is the key. I have also seen some users have had better luck if they first forget the device (settings > device > forget this device) then connect it and upgrade it, or the software, whatever needs it.
Hope that helps understand the issue.
Matt Akers
Zune Product Team
.: This posting is provided "as-is" with no warranties, and confers no rights :.