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Fixed.
I did as you said and there was a folder in there named after the external drive (the external drive was, of course, not mounted at the time).
I deleted it (after confirming it was just the right size to be the problem image) and that did it.
Thank you. I was near heart-attack. I've since re-done the SmartUpdate and it worked (I made sure to point it directly to the external drive first).
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