Xbox wont let me sign in says I have no storage but I have more than enough (xbox 360 new update)

Xbox 360 has a new update that is required, and it says, "If you decline, you won't be able to connect to Xbox Live until you take the update...". Now I have tried to update it multiple times, but it wont let me because it says, "You don't have enough storage space to take this update. Please connect an Xbox 360 storage device with at least 190 MB free space." I have a storage in my Xbox 360 hardware drive, and I had over 30 GB left which is more than enough to update the system. I tried to access my storage, but when I do it says, "No storage devices found.", which is bogus because its in my Xbox 360 system. I'm kinda *** either way because they wont let me sign in, and then on top of that won't me access my storage at all because I think its linked with my Xbox Live. My internet connection is perfectly fine by the way.