I'm not sure if I understand you correctly. Are you trying to perform a DME update maybe? These two sentences puzzle me.  :-[quote]If i change to HDG mode to update the INS1 it doesnt update at all.

But the update light does not light up at all.[/quote]
For a DME update, just make sure the proper station is tuned and showing up on the DME display (of the 707). Means that you have a reception. Then perform the steps to start the DME update for the INS.

Here's some more information from this thread.
http://captainsim.org/yabb2/YaBB.pl?num=1285100008/156#156

http://www.captainsim.org/yabb2/YaBB.pl?num=1285100008/138#138