So while I know the thread is ancient I wound up here while upgrading an old switch and getting O's that had me worried... so to sum up the above...
1. There's no room in the flash and the switch is trying it's best to put it in; and
2. Slow LAN/WA...
Working on these questions myself and found thishttp://www.cisco.com/en/US/prod/collateral/voicesw/ps6790/ps5748/ps378/solution_overview_c22-597556.html