Wow, I'm glad you got it working.
You know, I ran into something sort of similar with my Surface RT back in early June, I think. This was back on RT 8.0, of course. Anyway, my Surface had become crazy slow - essentially unusable. So I initially decided to refresh it. Short version of the story - it never had enough free space to do it; got to the point where it would tell me it needed another ~30MB of space, so I'd remove ~60MB of programs, and then it would tell me it needed ~30MB more space. After several iterations of that I got really p****d off and did a complete reset - wiped out everything. Then I did just like you did. Sat and ran updates until it was current at the time before doing anything else. Tried using it for a day or so and it was much better - better than it had been in a long time, in fact. Then, since I had wiped everything out, I went ahead and installed the 8.1 preview, which though it had a few annoyances, ran pretty well. I never had some of the severe problems others were reporting with the preview. Now updated to the 8.1 final version, everything is great. Strange, like there's some fragility in the update mechanism that shows up sporadically.