Do soft reset (hold power button until device turns off, ignoring popup message.) Wait a minute or two, then turn it back on. Go to screen sleep settings. Change it to 5 minutes.
Then go to shop, buy something free. Download it. Keep wifi on. Let device go to sleep. Let it sit for half hour or so. See if purchase initiates update. If that doesnt work, try the check for updates again.
Re: sideloading the update. When you attach your HD to the computer, what is the computer calling the device? If its "MyNook", update should work. But if its calling it BNTV###, computer seems to consider it a camera, and the update doesnt seem to work.
See if any of that works.