Nexus 5 Lollipop goes into Recovery while trying to update to 5.0.1 I'm using LG Nexus 5 Lollipop (manually installed 5.0) and rooted with TWRP.

I just go notification to update to 5.0.1. But when download and install, the phone automatically goes into TWRP Recovery mode, and if I restart from there nothing happens. I have to download the update again and so on...

Manual adb sideload doesn't work because of TWRP recovery.
Also I have tried sideload from inside TWRP, doesn't work.

Basically if I try adb sideload, on fastboot screen it get error: no device found. (Please note: if I use adb command while connected to PC in normal phone state adb commands work fine. even the adb reboot bootloader.)

Updated: after following below answer, if you too get stuck like me while on adb sideload, please update your drivers like this: https://www.youtube.com/watch?v=wXtbAMarHQw

If you face error: closed while adb sideload
then type this command: adb usb
and then type adb sideload UPDATE-SuperSU-v2.40.zip
Try using this method:

https://gist.github.com/eyecatchup/ec0a852428c19705380e

Give thanks to this guy of course.

EDIT:

The steps outlined in this document assume the Android SDK to be installed on your PC and the adb, fastboot and android.[bat|sh] to be in your PATH variable!

Download OTA zip from Google's servers to your PC.

http://goo.gl/dx2JoM - signed-hammerhead-LRX22C-from-LRX21O.785a2f7a.zip

Rename the downloaded zip to 'update.zip' (without the quotes (and if you're on windows and known file extension are hidden, make sure you not end up with update.zip.zip)).

To the same folder, download the latest SuperSU flashable zip.

http://goo.gl/XRK49m - UPDATE-SuperSU-v2.40.zip

To the same folder, download the latest TWRP recovery image for hammerhead.

http://goo.gl/XhAOt7 - openrecovery-twrp-2.8.2.0-hammerhead.img

To the same folder, 
download the 5.0 factory image tgz archive from Google's servers.
http://goo.gl/Z8ITiM - hammerhead-lrx21o-factory-01315e08.tgz

From the 5.0 tgz archive extract the

recovery.img

boot.img and 

system.img files to the same directory where your downloads are located.
(Tip: With 7zip, for example, you can 'internally' open the archives within the archive and extract just the files you need. The same is possible with command line tools, of course.)

Update platform-tools and tools of the sdk manager.

Connect your device (USB debugging enabled, of course) to your PC.

Back at your terminal, go on by running the commands as follows (type only those lines prefixed with '> ', but without actually typing the '> '!).

# Make sure the device is recognized
&gt; adb devices

# Boot into bootloader mode
&gt; adb reboot bootloader

# In bootloader mode, make again sure the device is recognized
&gt; fastboot devices

# Flash stock LRX21O recovery image
&gt; fastboot flash recovery recovery.img

# Flash stock LRX21O system image
&gt; fastboot flash system system.img

# Flash stock LRX21O boot image
&gt; fastboot flash boot boot.img


When the last flash is confirmed, use the volume rockers to choose 'Recovery mode' and confirm with the power button.

When you see the little Android lying with the red triangle warning sign on it, push power then volume up to get to the recovery options.

When you got to the recovery options, select 'apply update from ADB' using the volume rockers again and press the power button to choose it. When the device says it's awaiting commands, type from the PC's command line:

adb sideload update.zip


When OTA update successfully installed, select 'reboot bootloader' from the recovery options again using the volume rockers and press the power button.

Back in bootloader mode, type from the PC's command line:

fastboot flash recovery openrecovery-twrp-2.8.2.0-hammerhead.img


When the flash is confirmed, use the volume rockers to choose 'Recovery mode' and confirm with the power button.

Now in the TWRP recovery menu, choose 'Advanced' &gt; 'adb sideload'. Check both option, clear 'Dalvik-Cache' and 'Clear Cache' and swipe the bar to start sideload mode. When the device says it's awaiting commands, type from the PC's command line:

adb sideload UPDATE-SuperSU-v2.40.zip


When done, confirm to reboot system. Finished. Mission completed.

You're now on 5.0.1 with your custom recovery, rooted and can pick up from where you left.

PS: First boot, as always, will take some minutes.