Yeah it looks like the eShop spoof method currently being used stops working if the 3DS has an update downloaded. I had this issue for a bit on my sysnand and couldn't get around that error. I even tried visiting Safe mode since I heard this gets rid of the notification. But it seems the update files are still there because eShop still refuses to connect. (same error I think)
It's not the same error as the update prompt eShop usually gives you. The spoof gets past that, but once it logs into my NNID, that secondary error comes up.
I eventually got around the issue as I had found a NAND backup that didn't have any update downloaded.