Unable to install latest update....recovery doesn't look right.

I have factory reset my phone and downloaded the update, but it fails when installing. I see a large "!". What's odd is when doing the factory reset, it pout me in the menu driven recovery. The one where I have to use the volume buttons to move up and down the menu to preform the factory reset.

Is this the problem?
Any way to load the factory recovery back?

thanks