Just to point out... your poly knows nothing about your home network when you first get it, so it HAS to be in hotspot mode in order for you to connect to it and go through the setup, otherwise, how would you connect to it? Keep in mind that gofigure wasnt out initially when the poly first released so connecting that way and doing the setup wasnt available when they released it. Sure its frustrating, but its like any smart home device, they set up a hotspot so you can connect to it and go through setup. Granted yes, the poly setup process is not nearly as intuitive as some others and the older firmwares... well, they kinda suck.
Also, if you were on a significantly older firmware as you were, you likely need to go through the individual update procedures, which... also sucked. It was basically, turn your poly on and get it connected to a network with internet, then... wait. Then power cycle it... and... hope it took?
And yes, your assumption is correct, the in app firmware update procedure was only available recently and required you to be on 1.0.41 (I believe), thats the only one you can initiate the in app firmware update from. And it was only released specifically as an inbetween firmware to get you to 2.0
So I get your frustration, the older firmwares werent great, the update process was never communicated well.
So, you have it connected to your home network... here is what I would suggest. Power it on and leave it for 10 or 20 minutes. Then power cycle it. And see what firmware version you are on. Then try again until you get to 1.0.41, then once you get to that version, make sure the sd card is out, then try to update the firmware through the app.
Yea, its all a pain, but if you can get yourself to 2.0 without too much hassle, the experience really has improved quite a bit.