I can never get the rename system folder option to work... the reason why the updates are blocked from running is a protection offered by Dashlaunch so you dont update your system and break your jtag... but if you are patched to the proper freeboot the system update will not harm your machine and your original problem will hopefully go away.... sooooo what you can do is run the dashlaunch default.xex (or install the latest dashlaunch) and one of the questions will be "allow system updates".. just say yes... just remember when you are all done to re-run dashlaunch and set allow system update back to NO.
I've got to update my nxe right now come to think of it... off I go!