Can I update my MSc thesis after submission
There is nothing immoral about correcting mistakes in your earlier work. Passing off your amended version as that which you submitted to your institution would be rather questionable, though.

I do not think that any library would replace your original submission with an amended version unless that amended version was created through an official process at your institution. I don't think that such an amendment process is available in most cases for an MSc thesis. 

So your problem of trying to drive readers towards your updated, amended and corrected work, remains.

Perhaps one solution would be to correct your original work and have a version of this available online, with some appropriate title which indicates it is an updated version of your earlier work, as you suggest. I suggest that you make it very clear where your corrections were made in your updated version -- going so far as to quote the original work and indicate what you changed and why.

You can then point your colleagues towards this updated work. 

You original work will remain on record, and any failings in it will be reflected in the grade you receive for it.