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When you try to upload the file the full path 'C:\pa\panupv2-all-apps-489-2600' is being passed to the Firewall as the update file name, and that extra 'C:\pa' is what is throwing off the management server. This problem is more common in Internet Explorer so using a different browser could also fix it - please try with some other browser (some browsers are passing the full path to the pa as the content file name).
You can also take a look this doc: https://live.paloaltonetworks.com/docs/DOC-2740