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Problem

The 13.2.0 operating system did not run from an SD card in the external slot of an XO-1.

select an SD card of at least 4GB; the faster the better, but it will be erased by the process below,
select a USB drive of at least 1GB,
download 32014o0.zip (601 MB) and expand the contents onto the USB drive,
Shutdown the XO-1,
insert the USB drive and the SD card into the XO-1,
hold down all four game keys above the power button,
turn on the laptop,
wait for the message Release the game keys to continue,
release the game keys, progress will be displayed, grey blocks will turn green, and the screen will show:

 Blocks/square: 2        Total blocks: 14195     Now writing: 70  0 %
 Installing to SD card ..... please wait.

 Blocks/square: 2        Total blocks: 14195     Now writing: 0  0 %
 Rebooting in 10 seconds ... please wait.

it is finished, you may the USB drive then, during the reboot, or after the reboot.

Use these steps to prepare an SD card for an XO-1, using an XO-1.5, XO-1.75, or XO-4.

download as above,
insert the USB drive and SD card into an XO-1.5, XO-1.75, or XO-4, but do not boot the laptop from the USB drive,
instead, at the Ok prompt, type

devalias fsdisk ext:0
fs-update u:\32014o0.zd

wait for the fs-update to complete,
remove the USB drive, insert into an XO-1, power on, wait for Sugar, verify version in My Settings, About my Computer.

the fs0.zip file is expanded, the signature verified, and the payload is run,
the payload is Forth source for fs-update to external SD card on XO-1, followed by block hashes,
the fs-update reads the block hashes, reads the 32014o0.zd file, expands the blocks, and writes them to the SD card, then reboots.