Note: AFAIK, this has nothing to to with the new version of Software Updater, but rather the version which came on the MacOS 9 CD.
About two weeks ago I described in this forum a situation where my bronze powerbook failed to boot -- the startup disk was not being recognized.
After trying a few things I did a clean install of OS 9. After installing Conflict Catcher 8 into the fresh system, I used the Merge feature to transfer my customized things over. When I selected my Previous System Folder, Conflict Catcher reported that it could not find the System and Finder files! Of course, they were there. (To allow Conflict Catcher to do its job, I replaced apparently corrupted System and Finder files in the previous system folder with copies from the from the new system folder). I never determined exactly how the corruption of these files took place.
This morning I discovered one factor that appears to play a role. Mac OS Software Update alerted me to update the Java MRJ. When done, it told me that some files had not been installed. To be safe, I restarted my powerbook. Upon booting, the startup disk was no longer recognized, just like my former experience.
Aggh. Reinstall the system etc. This time, I'm turning off the automatic updating. I'll update manually as necessary. I will also keep backup copies of just the System and Finder files for quicker fixing.