I've checked for updates, it says I'm up to date. The couatl.log indicates I've got v3.0 build 3171.
As explained on the GSX manual ( the explanation between minor and major update ), the Live Update cannot update Couatl.exe, because it would require to write over itself, something which is not possible while the program is running.
To get the latest Couatl.exe, you must exit from FSX and download and install either the Stand-Alone Addon Manager OR run the full GSX installer.
after I decline follow-me couatl fails and I select restart from couatl message box.
This doesn't necessarily mean the problem is caused by not having the latest version of the .exe. If you have a message box prompting you to restart (which ALSO suggest to "download and install the latest Stand-Alone Addon Manager), that message doesn't say JUST that, it will also prompt you to open Notepad to see the error LOG.
If you failed to check your error log when you were prompted to do it, you can read it in the following location:
%APPDATA%\Virtuali\Couatl.ERR
This includes details of the error, that you should have posted here, so we can understand the problem.