SOLVED!
The solution is to use --bypass-uptodate when trying to update to an older version of firmware. Using -f would not work as it was already updated to a newer version of firmware.
The cmd line looks like this when it works:
C:\Program Files\Fusion-io\Firmware>fio-update-iodrive --bypass-uptodate fusion_3.2.11-20150618.fff
WARNING: DO NOT TURN OFF POWER OR RUN ANY IODRIVE UTILITIES WHILE THE FIRMWARE UPDATE IS IN PROGRESS
Please wait...this could take a while
WARNING: YOU ARE ATTEMPTING TO FORCE A FIRMWARE VERSION DOWNGRADE - THIS MAY RESULT IN DATA LOSS
Do you wish to continue [y/n]? y
Updating: [====================] (100%) -
fct0 - successfully updated the following:
Updated the firmware from 7.2.5 rev 110646 to 7.2.5 rev 110646
Updated CONTROLLER from 7.2.5.110646 to 7.1.17.116786
Updated SMPCTRL from 1.0.35 to 1.0.35
Please reboot this machine to activate new firmware.