Isn't this typical of any application, that if you move it from its original install location, updates won't work? Or is that not what happened here?
Depends... on Windows, some applications are smart and use the registry to keep track of where they are installed physically. Also, if an application is hosting its own update process (like FireFox) it can know it's location based on the the executable's path. Also... Some applications use environment variables to do this... but that's pretty unreliable and sucks.
Oh... and some applications will search for themselves if the default location isn't valid.
So... I would say that the updater is kinda lame and not robust... especially if there is a known defect that is causing it to be moved or be corrupted.