ok, got it. Here's the update. I've 3 domains which i'm using to develop some ecommerce store
Let's start with techgarage.my, test site was at /temp2 - we installed WooCommerce and Woothemes and started customizing the site. Was updating the plugins when the message "header was not found" came. Then tried again and it said "folder already exist" when it didn't.
So we moved and reinstalled the original site from Joel, the developer's server on outdoorgears.co. And another copy at /temp2. Was busy updating outdoorgears.co when the same problem occurred. I suddenly cannot update the files from wordpress anymore.
I contacted the developer and also WooThemes and got really fed up as both had no answers
Yesterday, I thought of maintaining some sites and dropped by fridgepirate.com. it hardly had any plugins, no woothemes nor woocommerce and only Studiopress' Genesis plugins. After updating the core to 3.4.2, I proceeded with updating the plugins to which, it gave me "header not found" And subsequent retries gave me "folder already exist", which is not true. Checked FTP and it's not there :(
Web Host created email@example.com and asked me to use it to update, which worked for now. But just like for outdoorgears.co, it might just stop working