Looking for a similar problem in the forum, found post last September "Can't upgrade linux-image [@NAND is failing]".
Igor said it is a bug:
but there is a procedure to update (also in last September post "Kernel update procedure has been changed" Igor explain the update on the procedure for a NAND boot / root on SATA/USB situation):
In the latter post it explains about watch upgrade log if you have problems:
Maybe this can help you. I'm going to test it myself next week when I return to home...