Greetings @Muzzy,
Just to make sure I understand your entire situation, I have some questions.
To summarize you are doing an offline synchronous update and the main issue is that your reboot is failing. Do note the error about the PROXY is not really related to the update, nor is it a critical issue and can be ignored in this context.
So you said you “disabled” the automatic reboot. If that is the case then why are you still expecting the system to automatically reboot during the update process? Also why did you disable the automatic reboot mechanism in the first place?
Is it because of this old thread?: Updating OS Image and Docker compose file at the same time doesn't work - #4 by Muzzy
Because in that thread I said the issue was fixed now in the latest versions of 6.X. Meaning you don’t need to do this workaround stuff anymore. In fact it doesn’t even work the same anymore in the latest version which is probably why you’re seeing the behavior you’re describing.
If you’re on the latest version of Torizon OS you can just use offline sync updates normally as documented.
Best Regards,
Jeremias