I have a building scene which is not entirely upright, so I thought I'd give the Update Origin tool a go to fix it.
The Help indicates that I can set the origin location first, and then press the Spacebar to locate the direction of the Z axis.
So I do this and press Enter to accept, and the result is that the Z axis (blue arrow) is not pointing from the origin and in the direction of where I selected for the Z direction. It does also ask me for the X axis next which I do in the same manner.
The origin point is set correctly, but the orientation is all over the place. I can turn on the Grid to see the orientation.
Am I doing it wrong, or does it not work correctly? Note, I am yet to get the service pack installed correctly. It refuses to be applied, even with the Autodesk workaround.