When I run the game and go to data files there is just Skyrim.esm and nothing else. But in my data folder the update.esm file is there. Stealth loading or do I have a problem?

In the steam library right click Skyrim, hit properies --> Local Files --> Verify Integrity of game cache. If there is a problem with the file, that will fix it.

I've not been sure about this Update.esm either. Its there but its not showing in data files at all. It does show up in NXMM though but it has no load order number assigned.

Yeah and when I select it and run the game, when i go back to NMM it is once again unchecked.