I just wanted to post this fix i found yesterday after a customer contacted us about the new update from Wasabi version 1.3 BETA 1
It's an easy mistake to make but if you update your Wasabi in emulation mode you will get E64 error and Red Dot (Slims). So now emulation mode doesn't work but passive mode works.
Heres how to fix it.
Delete EVERYTHING form your hard drive apart from the iso's. Also remove the wasabi folder.
Transfer all the new update files from Wasabi Firmware 1.3 BETA 1 to your hard drive
Create your dvdmenu files using the Wasabi software and apply them to your hard drive.
Before removing your hard drive from your computer make sure to use the "safely remove hardware" option in windows, if you dont do this you can corrupt your update file.
Connect your hard drive back to your wasabi/xbox, put the wasabi in PASSIVE MODE, turn on power to the hard drive first then hold the select button on the wasabi and turn on your xbox.
This is the critical point, the wasabi doesnt seem to update like it normally should, the blue light just keeps on flashing.
Keep hold of the select button for 30 seconds then let go, the blue light will continue to flash, just leave it, it takes about 10 minutes, dont turn off your Xbox while the blue light is flashing.
Eventually the blue flashing light should turn solid green and you will have a flashing green dot in the center of the xbox power button.
This means the update has worked and you should now be able to reboot back into emulation mode and the E64 + Red Dot has gone!
I hope this helps anyone who has had this problem. It took a while to figure out what to do and even Team Wasabi themselves didnt have an answer.