Because you're not specifying the full path to find wyUpdate.exe. Instead you're specifying a relative path, and Windows is looking from the location of the shell (Explorer.exe) instead of your extension. Or rather, the AutomaticUpdater is looking at the "Shell" (rather than your extension) as the parent process.
So explicitly specify the location of wyUpdate in the "wyUpdateLocation" property of the AutomaticUpdater.
Does this make sense?