what columns to include in the index to improve the performance of the following update?
I fail to see how included columns can be anything but overhead for an UPDATE. If you think about it... Included columns are there to eliminate the lookup for each row. But you still have to get to the row (do the lookup) in order to modify it for an update. And every time a column is in an index (included or key) this value have to be updated (in addition to the actual data) when a modification occurs.