Actually it can (but better do it manually using RenPy SDK GUI) by manually selecting RenPy SDK version for rebuilding and selecting distribution type in settings. But I dunno why he needs to update (btw it already build with quite recent SDK version that have avif/AV1 support) and don't wanna know coz don't have time to waste, there were very good modder that complained every time when devs updated game engine that could say why it's a bad idea if he hopefully come back. Probably it's not working for him because not installed RenPy SDK as it said at OP.