Please refer to your other thread for my response regarding this subject: https://forum.sierrawireless.com/t/ar7556-device-breaks-legato-framework/12041/2
As for failing the update process, you are currently trying to apply a WP7 firmware package SWI9X15W_06.03.39.00-wp_yocto-cwe.exe on an AR7. That is why it is failing. To get access to the AR7 firmware package, you will need to contact your FAE.
Thanks,
Enoch