I'm guessing I need to run a custom script that will get copied to the Temp files. Any advice on at which stage to do it? Before update? I also shouldn't touch any files that are being updated, since wyUpdate uses patching system, correct?
wyBuild already handles this for you -- it compares your versions to see which files to patch, which files to add as whole files, and which files to delete. This is why in the step-by-step walkthrough we say to add all files to wyBuild.
Now, if you're adding files outside of the predefined folders in wyBuild then you will need to execute a simple script to remove these files. You should include the script in the temp folder in wyBuild and have it execute after the update has completed.