I had the same problem I even returned my watch and got a replacement but it still happened here’s how mine managed to update: First I signed out of iCloud on my iphone (I’m running a 12 on iOS 15) I then hard reset my iPhone by quickly pressing volume up, then volume down and then holding the power button until the phone powers down. (it will start it self back up and no data is lost) I then factory reset the watch and waited for it to boot back up ( this may take some time, for me it took 15 minutes) After that I started the pairing process using the automatic option with the camera over the frame of the watch The error will come up again but then I waited as it was still checking for an update and the update came up after around 5 minutes of waiting. it seems for this bug there is no official fix and different things work for different people. The changing of region/language didn’t work for me. I hope this works for you as this needs to be patched by Apple quickly