Had this problem too. I just removed my disk drive and it worked.

TGK wrote So, I'm trying to write my NAND after forgetting to change this Phat KV to a Slim and it will still bot XeLL, but it doesn't print saying it's trying to read from any local storage. It just says it's reading from TFTP. I've tried a USB (FAT32) with rawflash, name as updflash.bin, name as nandflash.bin, xenon.elf, etc. but nothing worked. I tried using the disc, but it did the same thing as the USB.

I had the same problem and i know exactly how to fix it. Sometimes Xell has a fault loading information/reading a USB due to the DVD drive. what you need to do it take apart your console and you know there are 2 wires that go into the dvd drive? disconnect the sata cable from the dvd drive but not the dvd power cable. Now boot up your console using the eject button with your usb plugged in and it will read and load everything.