Hi,
Yes, you can still install Windows 10 as long as you have the product key of Windows 8.1. To do that, you may refer toAndre Da Costa's Wiki Article here.
As for the Windows update, we suggest running the Windows Update Troubleshooter to automatically fix the issue that's causing the update not to be installed on your device. After running the troubleshooter, you may install any available updates again.
Keep us updated if you need further assistance.