Had the same problem in regards to constant "update" on launcher. Complete re installation helped me fix the issue (just the info for those experiencing the same issue).: -deleting old folders first, -re-installing original d2 and d2lod, -then installing median's launcher, -patching d2 via it (in setup set the right folder if needed).
Launcher stopped working just randomly after the game crashed and now I can't start the game anymore .. I just says Unknown version down where the play button is and "Update" . When I try to update it seems like nothing is happening and the I asks to restart the launcher and I'm then stuck doing the same thing over again.
Now I've tried reinstalling the game and the launcher 2 times