Nightly builds update each day and sometimes more than once a day if a respin is scheduled. So you need to close and restart to apply a downloaded update. Try to run the Firefox program once as Administrator (right-click: Run as Administrator) if there are pending updates. Also make sure that security software doesn't keep a file handle on files.

Nightly (also Aurora aka Developer Edition) get checkins almost everyday so they get a update each of those day. The version on the Nightly channel remains the same until move/merge to Aurora and new version starts on Nightly. The Beta channel builds get say six to twelve builds each version.

If you are using Nightly development channel builds just for the Win64 builds well there is Win64 builds on Aurora and Beta channel builds also. The Firefox 42.0 Release may be the first to have Win64 alongside 32-bit though it will only be on ftp.mozilla.org initially and not mozilla.org or mozilla.org/firefox/all

I've been having the same issue for a couple of months now in version 48.0a1 in windows. After doing an unistall and reinstall, and uninstall and "clean" reinstall, the problem was still there. I started doing the manual update and it worked for 3 days. After those 3 days I started looking on the update history in appdata folder and turned out that when I erased the contents of mozilla\update folder, the updates started to work automatically again. I just wanted to leave this in the community as another alternate solution to the annoying "Cannot apply update cause of another instance running".

Hope it helps

Best regards

Update: Automatic update failed again today (3 days after I posted this solution) tried the common suspects with automatic update, none of them worked, went back to appdata\local\Mozilla\update - cleared the folder, downloaded Nightly update from site, ran it, manual update success. There is something either with my automatic updates download, or the permissions on executing files from appdata\Local. I'm still investigating and if I find anything useful I will post it.

Best regards

amancera said

There is something either with my automatic updates download, or the permissions on executing files from appdata\Local. I'm still investigating and if I find anything useful I will post it.

Not with your install but with the infrastructure for the last few days. Updates have been turned on yesterday in a limited sense for Release and while those Testing pre-release builds as in Beta, Aurora, and Nightly may not be getting updates at moment.

https://support.mozilla.org/en-US/forums/contributors/711925