1. Sorry, but system updates aren't released by Microsoft on Xbox.com. The update which allows you to play divx, avi e.t.c files can only be downloaded one you connect to LIVE.
Take your HDD/mem stick to a freind's (unbanned) Xbox 360 and update it from there....easy.
2. What i said above...
3. No, i haven't tried downloading any demos from torrents....You can take this up with ShayanShehraz, he knows much better about this.