@Safinn As you’ve observed, you can’t use m update to change which volume is mounted to a VM (you can use it to change the mount point, though). The UX is in flux, though. (Edit to clarify: afaik you’ll still need to mount the volume at machine creation time.)
Did you get any error from fly m update? I think it will error if you try to update to a different volume if you already had one mounted, but I don’t know if trying to mount one to an already-created volume-less machine is caught by that.