Before I build the new client.wyc and wyUpdate.exe to include my latest installer do I have to add the files to the latest update folder inside wyBuild first 1st?
You never need to include wyUpdate.exe within your updates. Include it with your installer, yes, but you don't need to include it in your updates because wyUpdate self-updates.
The client.wyc file is different. Again, you should always include the latest version of this file in your installer. Also, you can include the client.wyc file in your update if you've changed something in it.
The exact process is covered in the New release workflow article. Tell me if this helps.