Read uncommited does not work in UPDATE WHERE NOT EXISTS
There is no "first update", "second update" here, there is one statement, one atomic update. And this update produces 2 rows that are the same.

If you want "the second" update to not succeed you should write 2 explicit updates, not one, inside 1 transaction. But in this case nolock would have no sense because the same transaction sees its own uncommitted values without any hint at all.