I think the update software you mention must be the thing called 'Gameshadow', which I didn't allow to be installed on my system, for much the same reason as you. I don't like installing anything that looks like it might be 'crudware', and I'm not computer illiterate, so I don't need any handholding.
And yes, you have to have the DVD in the drive to start the game. However, I believe you can remove the DVD after you've fired it up. I've pulled mine out a few times while playing, (though I didn't keep it out long), and had no problems.