[Google Pixel 3 XL Questions & Answers] timg11:
I found the issue - A Windows Path problem. The path was pointing to an older installation of Android Platform Tools different from where I installed the update.

I looked at the versions before and after updating and they were the same. There should have been at least some change.

I fixed the path, and just copied the tools to the update directory as a short term fix.

Here is how the versions look for the latest tools:

>fastboot --version
fastboot version 29.0.2-5738569
Installed as D:\Download\Hardware\Google\Pixel3XL\Temp\crosshatch-pq3a.190801.002\fastboot.exe

D:\Download\Hardware\Google\Pixel3XL\Temp\crosshatch-pq3a.190801.002>adb version
Android Debug Bridge version 1.0.41
Version 29.0.2-5738569
Installed as D:\Download\Hardware\Google\Pixel3XL\Temp\crosshatch-pq3a.190801.002\adb.exe

Here's how a successful factory update flash looks for anyone else who needs a reference:

D:\Download\Hardware\Google\Pixel3XL\Temp\crosshatch-pq3a.190801.002>flash-all.bat

D:\Download\Hardware\Google\Pixel3XL\Temp\crosshatch-pq3a.190801.002>fastboot flash bootloader bootloader-crosshatch-b1c1-0.1-5578427.img
Sending 'bootloader_a' (8493 KB) OKAY [ 0.284s]
Writing 'bootloader_a' (bootloader) Flashing Pack version b1c1-0.1-5578427
(bootloader) Flashing partition table for Lun = 0
(bootloader) Flashing partition table for Lun = 1
(bootloader) Flashing partition table for Lun = 2
(bootloader) Flashing partition table for Lun = 4
(bootloader) Flashing partition table for Lun = 5
(bootloader) Flashing partition msadp_a
(bootloader) Flashing partition xbl_a
(bootloader) Flashing partition xbl_config_a
(bootloader) Flashing partition aop_a
(bootloader) Flashing partition tz_a
(bootloader) Flashing partition hyp_a
(bootloader) Flashing partition abl_a
(bootloader) Flashing partition keymaster_a
(bootloader) Flashing partition cmnlib_a
(bootloader) Flashing partition cmnlib64_a
(bootloader) Flashing partition devcfg_a
(bootloader) Flashing partition qupfw_a
(bootloader) Flashing partition storsec_a
(bootloader) Flashing partition logfs
OKAY [ 0.512s]
Finished. Total time: 1.050s

D:\Download\Hardware\Google\Pixel3XL\Temp\crosshatch-pq3a.190801.002>fastboot reboot-bootloader
Rebooting into bootloader OKAY [ 0.045s]
Finished. Total time: 0.052s

D:\Download\Hardware\Google\Pixel3XL\Temp\crosshatch-pq3a.190801.002>ping -n 5 127.0.0.1 1>nul

D:\Download\Hardware\Google\Pixel3XL\Temp\crosshatch-pq3a.190801.002>fastboot flash radio radio-crosshatch-g845-00017-190312-b-5369743.img
Sending 'radio_a' (71132 KB) OKAY [ 1.689s]
Writing 'radio_a' (bootloader) Flashing Pack version SSD:g845-00017-190312-B-5369743
(bootloader) Flashing partition modem_a
OKAY [ 0.296s]
Finished. Total time: 2.300s

D:\Download\Hardware\Google\Pixel3XL\Temp\crosshatch-pq3a.190801.002>fastboot reboot-bootloader
Rebooting into bootloader OKAY [ 0.046s]
Finished. Total time: 0.053s

D:\Download\Hardware\Google\Pixel3XL\Temp\crosshatch-pq3a.190801.002>ping -n 5 127.0.0.1 1>nul

D:\Download\Hardware\Google\Pixel3XL\Temp\crosshatch-pq3a.190801.002>fastboot -w update image-crosshatch-pq3a.190801.002.zip
--------------------------------------------
Bootloader Version...: b1c1-0.1-5578427
Baseband Version.....: g845-00017-190312-B-5369743
Serial Number........: 8A*****C1
--------------------------------------------
extracting android-info.txt (0 MB) to RAM...
Checking 'product' OKAY [ 0.050s]
Checking 'version-bootloader' OKAY [ 0.058s]
Checking 'version-baseband' OKAY [ 0.058s]
Setting current slot to 'a' OKAY [ 0.071s]
extracting boot.img (64 MB) to disk... took 0.263s
archive does not contain 'boot.sig'
Sending 'boot_a' (65536 KB) OKAY [ 1.567s]
Writing 'boot_a' OKAY [ 0.209s]
extracting dtbo.img (8 MB) to disk... took 0.055s
archive does not contain 'dtbo.sig'
Sending 'dtbo_a' (8192 KB) OKAY [ 0.273s]
Writing 'dtbo_a' OKAY [ 0.071s]
archive does not contain 'dt.img'
archive does not contain 'recovery.img'
extracting vbmeta.img (0 MB) to disk... took 0.001s
archive does not contain 'vbmeta.sig'
Sending 'vbmeta_a' (4 KB) OKAY [ 0.114s]
Writing 'vbmeta_a' OKAY [ 0.054s]
archive does not contain 'vbmeta_system.img'
archive does not contain 'super_empty.img'
archive does not contain 'boot_other.img'
archive does not contain 'odm.img'
extracting product.img (194 MB) to disk... took 0.669s
archive does not contain 'product.sig'
Sending 'product_a' (199284 KB) OKAY [ 4.628s]
Writing 'product_a' OKAY [ 0.572s]
extracting system.img (2201 MB) to disk... took 9.765s
archive does not contain 'system.sig'
Sending sparse 'system_a' 1/9 (262140 KB) OKAY [ 6.222s]
Writing 'system_a' OKAY [ 0.062s]
Sending sparse 'system_a' 2/9 (262140 KB) OKAY [ 6.132s]
Writing 'system_a' OKAY [ 0.059s]
Sending sparse 'system_a' 3/9 (262140 KB) OKAY [ 6.184s]
Writing 'system_a' OKAY [ 0.362s]
Sending sparse 'system_a' 4/9 (262140 KB) OKAY [ 6.186s]
Writing 'system_a' OKAY [ 0.361s]
Sending sparse 'system_a' 5/9 (262140 KB) OKAY [ 6.215s]
Writing 'system_a' OKAY [ 0.363s]
Sending sparse 'system_a' 6/9 (262140 KB) OKAY [ 6.076s]
Writing 'system_a' OKAY [ 0.364s]
Sending sparse 'system_a' 7/9 (262140 KB) OKAY [ 6.199s]
Writing 'system_a' OKAY [ 0.364s]
Sending sparse 'system_a' 8/9 (258820 KB) OKAY [ 6.068s]
Writing 'system_a' OKAY [ 0.364s]
Sending sparse 'system_a' 9/9 (160160 KB) OKAY [ 3.829s]
Writing 'system_a' OKAY [ 0.762s]
archive does not contain 'system_ext.img'
extracting system_other.img (422 MB) to disk... took 1.934s
archive does not contain 'system.sig'
Sending sparse 'system_b' 1/2 (262140 KB) OKAY [ 6.162s]
Writing 'system_b' OKAY [ 0.363s]
Sending sparse 'system_b' 2/2 (170820 KB) OKAY [ 4.096s]
Writing 'system_b' OKAY [ 0.853s]
extracting vendor.img (446 MB) to disk... took 1.973s
archive does not contain 'vendor.sig'
Sending sparse 'vendor_a' 1/2 (262140 KB) OKAY [ 6.295s]
Writing 'vendor_a' OKAY [ 0.364s]
Sending sparse 'vendor_a' 2/2 (195404 KB) OKAY [ 4.609s]
Writing 'vendor_a' OKAY [ 0.870s]
archive does not contain 'vendor_other.img'
Erasing 'userdata' OKAY [ 15.316s]
Erase successful, but not automatically formatting.
File system type raw not supported.
Erasing 'metadata' OKAY [ 0.100s]
Erase successful, but not automatically formatting.
File system type raw not supported.
Rebooting OKAY [ 0.044s]
Finished. Total time: 128.702s
D:\Download\Hardware\Google\Pixel3XL\Temp\crosshatch-pq3a.190801.002>

Interesting to note that there are still various "archive image does not contain...." and "file system not supported" messages, but apparently they are normal.