This FileNotFoundException happens when your firewall blocks outgoing connections from the emulator to the server. The emulator needs to reach out to code.appinventor.mit.edu (or ai2.appinventor.mit.edu) in order to retrieve the update, and if the firewall blocks the connection then the update cannot proceed. You’ll have to go into the Windows Firewall settings and make an exception for emulator.exe to make outgoing connections.