If you want to update to 2.3.6 through SD card than you must have to apply the update through rebooting and using three button method to go to recovery mode.
One more thing, update through SD card works only when OTA update gives you a message that "Update Failed"
The manual method is made only for those who are facing "Update Failed" message after updating through OTA method.
---------- Post added at 10:02 AM ---------- Previous post was at 09:57 AM ----------
You can use that thread also, but I found that whole method a little bit clumsy.
So i searched the net and other threads and I found another simple method to do it.
Search over the net for A2ROOT.zip
You can root your phone through this and this works for 2.3.5 as well as 2.3.6
So i prefer that you first manually update through SD card and then download A2ROOT.zip and extract it on your PC's hard drive and run the 'click-to-root' and you are ready to go.....
But before unrooting make sure to Enable USB debugging and Allow installation of non-android market applications.
I turn on the Wi-Fi but he don't continue the downloading.