lwizzit Edit: I have installed the sd card with the image file, but I am getting the same behaviour. IS it not restoring the OS automatically when it sees an SD card?
The third generation ASIAIR works diferently, and does not involve an image in the microSD card.
When you apply a factory reset to the 3rd generation ASIAIR, it will copy an old working firmware that is stored in the ASIAIR's eMMC memory. When done, reboot and you can then update that older firmware from the tablet.
I would recommend first deleting the app in your tablet, and download a fresh copy -- the new firmware is a payload of the app.
To factory reset the 3rd generation ASIAIR, turn on the ASIAIR, then hold reset (paper clip in the RESET hole, or use the Liquid Metal tool that you received with an iPhone) for more than 5 seconds, then release the reset pin.
Chen