Just solved my version of this issue! I had upgraded to dual extruders last week and updated the firmware. Everything was fine until today when I started getting the "sd init failed" message. Before reinstalling the firmware, I took a closer look at the SD adapter card and saw there was a very very tiny piece of plastic missing from the corner edge. With a flashlight, I took a look in the sd slot of the machine and sure enough saw the piece that was preventing the card from being fully inserted. Piece is out and everything is back to normal. I will be sure to remove my new sd card with a little more finesse from now on.
Cheers!