This is a simple problem, NOT A BUG!
To update from any previous server to the latest, (at the time of writing the latest is 1.8.0.24) all you need to do is navigate to your server folder, copy the world from the worlds folder and the properties file out of the server and into a folder somewhere else. Then, download the latest server files, unzip them, make a new server folder, and run the new server .exe file to setup the server. Close this window. Then, delete any files in the new server folder's world's folder and paste your world from the old server in. Finally, copy and REPLACE your old server.properties file into the new server directory!
You can now run the server on the updated firmware!
Hi tim,
I believe that for the server to work at all both client and host MUST BE ON THE SAME VERSION. Try updating the client.
For the Online-mode=false issue, it shouldn't matter whether or not you are logged into Xbox Live or not. However, if you are not joining the server from your local network (LAN) then Minecraft will force you to use Xbox Live in order to join.
Good Luck!