Hi SHAHZEB FAISAL,
Thank you for reaching out to us on the Microsoft Q&A forum.
Thanks for sharing the details about the "update is required" error while trying to create a new copilot.
Please ensure that your work account has the necessary permissions. Next, check the Power Platform Admin Center for any pending updates in your environment and install them if available. This might also be a short-term problem brought on by network problems.
Additionally, try clearing your browser cache and then restarting your browser to see if that resolves the issue. We tried it on our end, and everything is working fine for us.
If you are still facing any issue, please let us know in the comments and where you are encountering this error along with the screenshot for reference. We are glad to help you.
If you found the information helpful, we would greatly appreciate it if you could acknowledge it by selecting the Accept Answer & Upvote options.