The update-user route is only initialized on WordPress if you have enabled the SSO Provider option. If you haven’t enable the SSO Provider option, then returning a 404 error is the correct response. From the option’s description:
This setting will only be activated if your site is functioning as the SSO provider for Discourse (this can be overridden by hooking into the ‘wpdc_use_discourse_user_webhook’ filter.)
The update-user webhook was added to the plugin before the Create or Sync Discourse Users on Login option was added (that option is found on the SSO Provider options tab.) The Create or Sync Discourse Users on Login option is probably more useful for most cases.
If you have enabled the SSO Provider option and the Update Userdata webhook and you are still getting a 404 error, please let me know and I’ll look into it.