timeout on updating nvarchar(max) after converting datatype
I'm not sure exactly what the purpose is of your entire-table-update, but perhaps the timeout is because your query is causing:


stats to be created
triggers to be fired
massive writes to the log (and potentially you are waiting on log file auto-grow - instant file initialization doesn't help you here)


If this table is replicated, the database is mirrored, or you've added CDC/Change Tracking then I think it is going to be much worse. If the table is participating in replication, you should read this topic.

What is the update supposed to do? It's too late now for this case but in the future an alternative way to do this for other tables might be:


add a new column with the new data type
populate it in batches with values from the old column, and use transactions or checkpoints to minimize impact to the log (and subsequent features that use the log)
once done, rename or drop the old column, then rename the new column to the old name


Of course this still has to be done in a maintenance window. You don't want users contending for writes during 2.