This is a step by step walk through of doing an update using the update manager.

After installing the extension either as a stand alone product or as a part of the Advanced Tools package, you will be presented with the welcome screen:

This screen is pretty self explanatory. It tells you roughly what is going to happen and gives you a link to get it started. It also has a "Parameters" button on the top right hand corner of the screen for configurable options:

From this we can see there are a few methods:

• Extraction Method - Extrator method to use, either 1.5 Extractor, 1.6 Extractor (default) or the version of PEAR Archive_Tar that ships with Joomla! 1.5 natively. Keep in mind that only the 1.5 extractor and the 1.6 extractor support FTP mode.
• Download Method - This is the option between fopen HTTP wrappers and cURL. A warning should appear if the method selected appears to be unavailable on your server. Note that you need at least one of these methods to update your Joomla! site.
• Use Proxy - This option controls the use of the proxy. If it is enabled, all connections try to use a proxy server
• Proxy Settings - The standard set of proxy settings are available, such as hostname, port, username and password
• Use Cached Update Method - This controls if the cached update method should be used. The cached update method is a mode that doesn't attempt to download packages but instead relies on the user placing the files in the appropriate location.

If you experience any issues updating, try changing your configuration. Where possible steps have been taken to notify you of issues that could arise. One item to take note of is that your Joomla! system should be writeable by which ever method you have configured, including your temporary directory. If this isn't writeable you may experience strange error messages.