I've been updating the firmware in my Linkit Smart Duos this way for a while.
I think the "5" seconds should be more like 8-10 but not as much as 20 - that works for me.
Also, make sure you have the USB flash drive formatted for Fat32, and the image file is name lks7688.img exactly - no upper case, no spaces, just exactly like that.
Use another machine to verify that the lks7688.img file is present and correct (make sure it's not 0 bytes).
Finally, if you can, attach a terminal to GND, P8 and P9 and so you can see what's going on.