Thanks Mike,the solution turned out to be almost the same what you suggested..I opened up a case with Cisco and here is what he suggested.

CSCsr12337

install all Return code 0x4093000C when //sup-local files used

Symptom:

the upgrade process will fail if the "install all" command

is given a module location as part of the image uri. eg:

install all kickstart bootflash://sup-local/image_filename

Workaround:

do not use module locations when specifying image uri's.

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The command "install all..." may eventually also fail thereafter

with the same error code, even if not using the prefixes //sup-local/ etc.

This may happen if the boot variables on the standby already contain

these prefixes - this can be checked with "show boot" and to see

which is the standby use "show mod".

Here is the procedure how to recover from that scenario:

1. Remove the incorrect boot statements:

conf t

no boot kickstart

no boot system

if that is accepted, go directly to step 4.

Otherwise if the switch returns:

failed to clear bootvar kickstart ( or system )

then go to step 2:

2. In that case you first need to perform system switchover:

- make sure that "show system redundancy status" shows the system

is in "operational: HA" state

- issue "system switchover"

- wait until the system returns to HA state as above

3. Remove the incorrect boot statements:

conf t

no boot kickstart

no boot system

4. Restore the correct boot commands

conf t

boot kickstart bootflash:old_kickstart_filename system bootflash:old_system_filename

exit

5. issue "copy run start"

After the above - the upgrade should go through this time.

As per the defect CSCsr12337 mentioned above - this issue

should not happen even when using the absolute paths

- in the software versions that have the fix ( 4.1(2) and later ).

In earlier software versions, when hitting this issue