There’s two benefits to creating an archive file from your server data directory:
Moving the data directory is a lot of data… a compressed archive means less data to be transferred
Transferring many individual files causes more overhead in the network traffic – transferring a single large file is more efficient.
No matter if you transfer an archive or the folder itself – make sure your Plex Media Server isn’t running when creating the archive or transferring the directory (otherwise your server will keep writing / changing data and you might end up with a corrupted backup that can no longer be restored!!)
As for the update service… if that keeps running, simply end the app/process using the Windows task manager.