Probably we have a misunderstanding. I connect via USB, shift the update on the Kindle, disconnect and run the update. The "Update your Kindle" is not grayed out. I never had this issue, expect if the wrong file is used.
I understood, that your button is grayed out, even if the file is in the appropriate place.
Obviously a USB connection IS needed. If you run debug mode permanently, there seems to happen at least something, avoiding running the update.
Last edited by diba; 01-18-2012 at 05:40 AM.