Ok, skimming through the manual I found this out about the update:
" Please note that when first loading the game disc into the Wii console, the Wii will check if you have the latest system menu , and if necessary a Wii system update screen will appear. Press OK to proceed."
Sounds like if you have your Wii on 3.2 the update is not needed. I don't know if if you already have 3.2 the update just won't appear, or if Freeloader will just bypass. Either way, the game does NOT need the update to work.
I think we're alright guys.
I also took the disc out of the case for a little look, and the inner rim of the disk looks dirty, I wiped the inner part of the disc and put it back in the case. Hope it doesn't stop the Wii from reading the disc.