From the Encarata dictionary
Update (transitive verb)
to provide somebody or something with the most recent information or with more recent information than was previously available
The data in the filestream file IS for all practical purposes changed i.e., updated. What is the mechanism of how that task is accomplished, is the real question we are quibbling about
It is accomplished by writing the new content to a new file, but this new files file name / identification is NOT changed.
My heart goes out to Dr. Diana Dee and Steve Jones, as I well know that framing the QOD is not a simple task, and I do disagree with the questioners designation of which answer is incorrect