Did you activate your virtual environment before running this command?
What errors do you get when pressing 'update'? Instead of the systeminfo bundle, the octoprint.log and the plugin_softwareupdate_console.log files from OctoPrint's logging section would be useful.
Ok well here is your problem. You have installed OctoPrint using snap, which is not a supported method of installing it. We don't know who has published the octoprint-pfs snap distribution, but I know it has problems, especially with updating and connecting to printers. As you found out, it is also nearly 2 years outdated (with 1.4.0 not 1.7.x).
Uninstall the snap version of OctoPrint and then complete the setup guide on the forum, which should get you up and running with the latest version, working properly. Just substitute your username wherever pi is mentioned.