Im not sure what exactly the problem was, but I switched from wired connection to wifi and auto-update works again, even without the "wait for network option".
Im thinking it was maybe connecting to the wired network before the openssh script executed (thus "wait for network" didn't matter), then openssh was doing its initialization thing as kodi was trying to do it verification thing. Then maybe using wifi slowed down the connecting enough that openssh had time to initialize first, i dunno ¯\_(ツ)_/¯