I finally made my mind to take the hard reset route.
Strangely even after hard reset firmware version is still 388.7_0; then tried to upgrade to 388.8_2 rog; got same error as before.
Fortunately after hard reset at least it allowed me to roll back to latest stock firmware. From there I can apply 388.8_2 without any issue.
Restoring to my saved settings also works just fine; even all my VPN clients are working.
Thanks everyone for your help! Merlin is the best and I just can't go back to stock firmware anymore