Plenty of resources are there on how to use this tool to sign your extension but sadly none of these explains the procedure when you have to update your extension.
So, I though to write about it as I have suffered many a times without understanding why my extension is failing to find updates.
Steps to update:
1. After updating your extension specific code go to your install.rdf and update the version. Now, package the extension as you normally do.
2. Open your update.rdf file and update the version information.
3. Go to your packaged .xpi and right click to see the file hash. This you ususally get by installing the hashtab. Copy the file hash and update it in your update.rdf.
4. If you had digitally signed you extension then you must be having the created key in the McCoy. Select the key.
5. Now click on sign. This ask you locate the update.rdf. Selecte your update.rdf and you are done. Just upload your extension .xpi and update.rdf