[Mark McLeod]

You may have been doing this already.
It's just that "re-imaging" or re-formatting the cRIO is unnecessary.
It doesn't hurt. It just takes longer and adds more opportunity for problems to occur.
In the cRIO Imaging Tool just pick Java as the Development Environment and Apply. Don't choose Format Controller.

Error 7 is a Windows error that just means it cannot locate a file that it should. Usually that means that when the file was attempted to be written to your PC disk that it got blocked by something (directory privileges, anti-virus, firewall) or it was corrupted or dropped altogether during a software install.
So the Java FRC plugins are possible, but I think Joe's idea of FTP getting blocked by something should be pursued first.

In addition to the firewall, disable any anti-virus programs that might interfere with ftp'ing files.