Just to clarify what I did was:
1. create my extension .xpi with a version number of 1.0
2. create another .xpi with a version number of 1.1 (both xpi's are
otherwise identical with the same GUIDs and everything)
3. both extensions reference the update.rdf I created in their
4. I installed the first extension in my browser and after it had
installed (closed and reopened all browser windows) I opened the
extensions window and clicked the update button. That's when the error
occurs, first I get a window saying at least one of my extensions
failed to update, and when I click to get more details I get the
messege you see in my first post.
Just thought I'd clarify so that the question makes more sense.