What I did to successfully update the Wiikey was:
1. burn the image (not sure if you have to filechop or not),
2. insert into the wii,
3. open and let it load the disc,
4. when it says "Press A or any key to start testing" you eject the disc, and continue,
5. it should now have sucessfully tested,
6. insert the disc again and continue,
7. when it tells you to press a key to start flasing (updating), you eject the disc again and continue.
Note: because the update program loads the disc into the system you wont need the disc to test/flash the firmware.
1. burn the image (not sure if you have to filechop or not),
2. insert into the wii,
3. open and let it load the disc,
4. when it says "Press A or any key to start testing" you eject the disc, and continue,
5. it should now have sucessfully tested,
6. insert the disc again and continue,
7. when it tells you to press a key to start flasing (updating), you eject the disc again and continue.
Note: because the update program loads the disc into the system you wont need the disc to test/flash the firmware.