Disclaimer
I don't have a solution for this problem, but I spend the better part of the morning undestanding why the update failed and wanted to share that with the rest of the community.


Source
Microsoft Answers
--Firmware and software post

Problem
When upgrading my developer unlocked Windows Phone to Mango i got the error 8018001E which prevented me from completing the upgrade process.
Now from what I was able to peace together the problem presents in 2 destinct ways.

1. Unable to update to Mango 7720
2. Unable to Install LG software update'

Now essentially the two problems are essentially the same, however people who have a developer unlocked model and have upgraded to the Mango beta (7712) will se the real error.

The problem seems to be a LG software update that fails because the bootloader on the phone is 1.5.0.0 and not 1.5.1.0 (which seems to be a prerequisite for the update).

Normal users will the NoDo or older versions of the WP7 OS will se the first error where as developers with 7712 will se the second error.
This is because the phones undergo to different update processes.

Developer phone update process 

1. Install Windows Phone 7 for ISV beta (7720)
2. Update to remove the provisioning of the phone
3. LG  software update

None develiper phones

1. Install Windows Phone 7 (7720)

Now what happens is that the LG software update is bundled with the 'normal' Mango update which makes this update complete with an error.
The developer phone gets the Mango and the LG software update as two separate updates.


What does 8018001E mean
Basically this error means that your phone does not have the prerequisite for installing the LG software update. The update requires a bootloader 1.5.1.0 and the bootloader is 1.5.0.0


Branded phones vs none branded phones
Now its seems like only none branded phones are experiencing this problem where as branded models can get the LG software update with out any problems.
It seems like the branded LG phones receive a boodloader update prior to the Mango release, which enables them to receive the update.


LG Software update
So what does this update do?
Well basically its seems like the update is for the phones Firmware and Radio software.

From version

Firmware Rev 1.0.7.10
Radio Software 1.0.7.10

To version

Firmware Rev 1.0.10.10
Radio Software 1.0.10.10

no solution yet?
or any comments from a MS moderator?

Bootloader is not a source of that error. In famous MS thread we had reports that mango actually upgrade bootloader to 1.5.1.0. Seems like firmware is the thing that causes problem. To prove that, some guys flashed devices with newer firmware and got their Mango on phones but this way is ofc not recommended.

MS yeasterday said that they will give us more information about updating problematic phones to Mango within 24h. Also somewhere in thread there is LG response and they said that they are working on fixing this issue however no ETA has been given.

Still no official solution?

Over one week and still no solution. I contacted the LG support and they just say that I should make a hard reset, I do and the update is still not working with the same error.