Created an account just to say thanks for this great site, a truly helpful resource!
I had a similar experience, and wanted to post here in case it helps anyone else...
I've had my LS-X2.OTL up and running for over a year, no issues. It stopped working a couple of months back, NAS Navi showed it was in Emergency Mode, and a firmware update to 1.65 brought it back online.
The problem started last week when I switched from a WNDRMAC router to an Airport Extreme. The NAS didn't show up at all when connected to the Extreme, not even in the NAS Navi.
I tried moving things around, and finally got the Navi to see the NAS by connecting directly to my PC's network adapter. I tried running the firmware upgrade again to break out of EM, but kept getting a "Cannot communicate with NAS" error.
I had been trying to avoid it, but it was time to adjust the IP settings! Using the "Change Adapter Settings" in the control panel showed my PC was in the 168 range, while the NAS was still in 192. Adjusting the computer to be in the same IP and Subnet range allowed the firmware update to take.
I moved the NAS drive back to the WNDRMAC router and we're back in business! Thanks again, forums.
TL;DR
Switching routers prevented my LS-X2.OTL from connecting. Solution was to direct connect to PC, match the IP/Subnet ranges, and reinstall firmware.