I think that on the real thing, you would get quite some offset then. You can't measure this offset (since you haven't any reference there), that's why you would want to avoid it.  :D

Now, in our Sim, the thing loses its navigational accuracy when going above "5" on the index. So your "9" is the max offset it can show (meaning your are "unlimitedly" inaccurate) and well beyond any limits for using it as navigational source.
Now, as said before somewhere, I don't know how FSX models this wrong nav source then. It could well be that, in the Sim, your ac stays on Course even if the INS doesn't really know where you are.
We just have to be aware that this isn't the way the thing should be operated and, also from my viewpoint, not of any fun to let it just go down the drain.  :P

So far, I only ran into trouble with the updating when over the Atlantic. My index went above "5" there and I was glad to see the first land based Nav sources coming into range. So I could bring the index down to below "5" within some minutes and was well aligned when reaching the landmass.
I think that the real planes don't lose accuracy that fast when just flying some "straight" line over the Ocean, that's the only explanation I have for them since they needed to be fairly accurately placed on this NAT track system, to avoid separation issues there.
The "needed" comes from the fact that most planes (if not all) on those tracks nowadays use their GPS which offers far more better readings and also maintains itself when compared to the old INS.

But my main question still remains. What's preventing you guys from updating the INS when some DME actually IS in range?
Something unclear on the procedure?
I can only recommend an installation with those green nav flags showing. Easy to see if you failed on entering the data there, no more questioning "will it update now?". The CDU shows some indicators too, but they are far more subtle than those green flags.
Since my first Civa operations often ended in the thinking that I am updating but in the fact that I did not, this looks like a big help.

Flying above some landmass will always give you enough stations to perform an update. The only places I remember for having only a sparse placement of stations (to perform an DME update on) would be eastern Russia or something. I had tons of NDBs there but only few VOR DMEs.
Being at high altitudes, the DMEs often radiate across quite some range though, so you should be ok in cruise while on the descent, the local nav sources (and not the INS) come into play.