I have found that either of the following methods work. The second is MUCH faster:

1.

UPDATE ISERIES.Serial#.Library.File

SET field1 = RTRIM(field1) + ' Changed' WHERE field2 = '00248000'

2.

UPDATE OPENQUERY(ISERIES, 'SELECT * FROM Library.File WHERE field2 = ''00248000'' ')

SET field1 = RTRIM(field1) + ' Changed' WHERE field2 = '00248000'

The last WHERE clause is probably unnecessary since it is included in the OPENQUERY SELECT