I had the same issues with this update path plus a couple more (upgrading DotNetnuke from 5.3 to 5.4). I resolved them the following way:
1. Reconfirmed directory permissions
2. Corrected the DotNetNuke\App_Code\XML\Handlers\download.vb file in
Replaced line 34 with
Private Sub RenderToResponseStream(ByVal Response As System.Web.HttpResponse, ByVal controller As XmlController)
Replaced line 89 with
Private Sub handleAuthenticateRequest(ByVal context As System.Web.HttpContext)
3. Replaced the DotNetNuke\bin\Telerik.Web.UI.dll file with the one from the FULL INSTALL
3. Updated web.config line
<bindingRedirect oldVersion="2008.0.0.0-2020.0.0.0" newVersion="2010.01.309.35" />
with
<bindingRedirect oldVersion="2007.1.1.20-2011.4.2000.20" newVersion="2010.1.309.35" />
It seems to work properly now
Derek