I got a replacement Simple Touch. It came with 1.1.0 firmware, while the latest firmware is 1.2.1
Following these instructions
nook_1_2_update.zip into the root of the nook 256MB drive. Instructions say "6. Your NOOK will automatically recognize the file after a few minutes when it goes to sleep mode, and proceed to install the updates." But this didn't happen. I waited for it to sleep few times, I also rebooted it.
Why it doesn't find the upgrade itself as instructions say?
How to force the upgrade?