No, client will not update and here's error in its system log:
"an update for {535CB6A4-....} failed to install. Error: 0xE00100001, DuResult: 60"
and also:
"Downloaded new content update from the management server failed."
and:
"cannot assign a client authentication token. there was a general communication failure"
Now that I set it back to test mode, client gets the update (obviously)
Please note even now in test mode, we receive "block" event (in control log) for fle BHEngine.dll in definitions directory in All users profile