Can we have wyUpdate file in .msi format

Can we have wyUpdate.msi file instead of wyUpdate.exe.Then it does not require admin previleges for installation of updates?

Installing to a privileged area is what's causing wyUpdate to ask for elevation. If you don't want a UAC prompt then install to a non-privileged are (Desktop / Document / AppData / Etc.) or give the limited user the proper ACL privileges for whatever folder you are already installing to.

I am installing my application in Programfiles in user machines who doesn't have admin rights. Whenever user have an update to install, will he able to install the update automatically using windows application? if not is there any other option we have?

Yes. I said it before:

or give the limited user the proper ACL privileges for whatever folder you are already installing to.