If i take your suggestion of creating the desktop icon on each auto-update, will it replace the current icon on their desktop or create a new one?
It will overwrite the existing shortcut (if you use the same name).
Also, i have another question....can i change the download site for the update files?
Yes, change your download site, rebuild wyUpdate, and include the client.wyc file in your new updates. Also, if you're releasing new installers of your app include the latest client.wyc and wyUpdate in the installer.
There is also an upgrade code with some GUID as the value.
Have you been able to reproduce this problem yet? Have your customers given you the steps they took? Did they install from a network drive?
It would be helpful if we could reproduce this so we could track down the actual cause.