Yeah--sometimes a manual change in Normal.dotm works, and sometimes it
doesn't. There is a logic to it, based on how Word creates new docs, but
not one I want to try explaining.
"automatically update" tells Word "when I highlight this text and set it
to 10pt instead of 12pt, I want that change to be added to the style
definition". So if automatically update had been on when you made the
manual change in Normal.dotm, then it would have changed the style
definition to make Footnote Text 10pt, and it would have been 10pt in
all your new documents.
But in general, you don't want "automatically update" on, because if you
are typing in a footnote and decide you want to italicize part of it
(say, a book title in a citation), when you add the italics, Word will
say "oh, automatically update is on, I should redefine the style so that
Footnote Text includes italics!" and suddenly all your notes are in
italics and you are screaming at Word for doing crazy things.
You can hit Undo once, which will Undo Word's change to the style, but
not your change to the text, to fix it. But it's very confusing and
there are a lot of complaints caused by it here. It's very useful in
certain contexts, but in general avoiding the setting lowers the chances
that Word will drive you crazy.