First, I assume you’re using the newer “binary” version of the updater tool as opposed to the original release? It does appear so given that you have a “firmwareTarget” parameter under the “Update Firmware” button/command, which was not in the original, but I suppose it’s worth asking as the original won’t work with .GBL files (which 700-series devices like the LZW36 use).
I can second the suggestion above: if you’re able to use it, Z-Wave PC Controller is usually faster and more reliable for me (LZW30-SNs seem particularly resistant to Hubitat’s tool sometimes, insisting they are “sleeping” no matter how many times I try the workaround of air-gapping them). But either method should work, and I don’t have any particular suggestion for the specific issue you ran into — besides this workaround.
Another thing, though: the 2.2.4 platform release for Hubitat will likely be out soon (staff teased it in a video a week or so ago). It includes something like the Z-Wave Firmware Updater Tool driver you’re using, except it’s built-in as an app. I’m not sure if they’ve fixed any specific bugs/issues as part of this conversion, but if you can’t do any of the above, have a C-7 hub (this won’t work on the C-5 and earlier), and don’t mind waiting, it’s certainly something else you could try.