In general, the application directory is relative to the update.exe directory. E.g. your software product is installed into the directory
and you will place the update.exe into the directory
then the "Application directory = Update.EXE directory\..\". If you will place the update.exe into the directory same as the application base directory
you should set the "Application directory = Update.EXE directory\".
It's the file which includes all update information of your application. E.g. information of all files, all update servers, etc. This file is stored on a server you specified and it's unique. Updater will download this file first to get all information for update. Then updater can know which files should be downloaded and updated.
It's the file named Update.EXE. It is generated by Award AutoUpdate Builder tool and it's for the end users of your application. Of course, your code also can call it.
They are the files should be uploaded to the web server for update. Every time you will release the new version of your product, you should use the award AutoUpdate Builder tool to build the server files and upload them to the web server.