I just got Audrey to do the last upgrade after 2 weeks of trying. I don't know what finally did it either but here's what I did for those who are still struggling with it.
When I first got Audrey I didn't have the USB net adapter so I had her dial in to my Toshiba server. No problems getting on the LAN and the Internet, she started with version 1.01.23.00 RC15 12/7/2000. That was apparently recent enough for the TFS to work because when I set her up for static IP with the spoof DNS address the TFS worked first time and then 2 more times to get me through 3 updates to 1.02.08.01 FINAL.
This version seems to have something that breaks the "easy" spoof because from then on all I got was the "There was an error while checking for Audrey's software update" message as I reconfigured Audrey, the LAN, my router, and my dialup server to every possible combination I could think of with no change.
Got a 3Com 3c19250 USB Ethernet adapter yesterday from EBay. If anybody needs one, seller "Maxiemumdeals" has them brand new in sealed original package, by the way. Plugged the adapter directly into my router, then:
1. Reset Audrey via the "wrong password 3 times" procedure, gave her a static IP with the 22.214.171.124 spoof IP for both DNSs.
2. Put in bogus email setup per ScubaSteve's post.
3. Set her IP up in the router for "DMZ" to place her outside the router's firewall.
4. Entered the date & time then took a deep breath and administered the TFS, she downloaded 3 files and installed the last update.
5. Confirmed same by another TFS after she reset and got the "Audrey's software is up to date" message. (shell works now too.)
Conclusions? All I can say is keep trying different things. I suspect that the Audrey reset and putting in a fresh configuration helps. Removing firewall protection per Steve is another tactic that makes sense. Everyone's configuration of equipment, LAN, ISP, etc. is different so there seems to be no one solution that we can isolate. Going to Ethernet from dialup worked for me but obviously others in this thread had different results.
Speaking of the others, my heartfelt thanks to ScubaSteve, Desiv, 2names, and all other posters to this thread. Knowing that others were eventually getting there kept me working away at it until I did too.
Thanks to Chris Russo for his collection of Audrey hacks and thanks especially to Jason Roysdon for hosting the DNS spoof and update servers that we're all using.