I’m not 100% sure what the fix would be, but (see possible solution below) I think at least part of the problem is that it’s trying to launch konsole to run some part of the update; according to the February update, konsole has been removed from bazzite, so System Update cannot find konsole and fails. So, somehow System Update on your system needs to be told to use Ptyxis instead.
ETA: Take a look in System Settings → Default Applications → Terminal Editor; try setting it to “Terminal” (for both of your accounts) or if, as in my case, you have two named “Terminal” try setting it to the other “Terminal”. Additionally, if you tweak your .bashrc at all, check to see if you have a default terminal set there.