Exactly what I was thinking. The SWUpdate.xml file is loaded only at startup, and it's never loaded again afterwards.
What is the Software Update tool doing in the image?
1.
(red color) When you first start it, it reads the "SWUpdate.xml" file and the "disclaimer_en.txt" file (depending on your computer's language)
2.
(green color) After you go to the second step and then you start the update process, the Software Update tool reads the "NW_WM_FW.UPG" file, which is the firmware, and then it sends it to your Walkman device (the "I:\NW_WM_FW.UPG" in the screenshot, in my case)
The difference in seconds, from 16 to 36, is the time I took to enable the Mass Storage mode on my player. I then went to the second step, and started the update process.
And that's the only thing that the Software Update tool reads from the folders.
Feel free to test it yourself, the Process Monitor executable can be found here:
https://docs.microsoft.com/en-us/sysinternals/downloads/procmon
With that being said, I'm really not sure what you guys witnessed...