Thanks for your replies guys.
I never extracted it. I downloaded, then renamed to update.zip, copied to SD card in phone and tried to update from recovery mode.
It was the same process I used before to manually update to 3.87 or whatever it was called.
What else should I try? Pls help.
Btw could there be leftover files on the sd card from last manual update that's causing this?
PS I even downloaded file again but still same message.
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The zip file that you download has a .zip extension. Unzip it and inside you will find a zip file called update.zip. This is the actual file that you need on the root of your SD card. Don't just rename the downloaded file. Open it and use the file inside. As a way to check, once you open the file and double click the update.zip file inside, you will notice inside of it, the system files and folders.