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I found a file on Verizon website to manually update the router but it did not work, says that software update failed. I still have version 03.02.01. Does anyone know how to get the latest firmware installed on this router?
Make sure you have the correct version of the firmware update being applied. There are three differnet revisions of the 327w that you could have and you can determine your version from the modem's Web GUI or from the sticker on the bottom of the router. Also when running the upgrade, shut off your Firewall and Anti-virus until it complete in case they are interfering with the upgrade.
See this page: http://www22.verizon.com/Support/Residential/internet/highspeed/troubleshooting/network/firmwareupgr...
Verizon should already be pushing the latest version of the firmware to you but that doesn't seem to be the case (likely though if you were in bridge mode previously).