Any 'update' would be listed in the phone's "Settings" and then "About Phone". In here you should see "System Update". If it doesn't show an update in there, then there isn't an update for your device.
What the person who told you this may have actually meant as that your tablet has and older version of Android and meant you may need a newer version to run things. However, that would not fix the problem, it would likely make it worse. The newer Android versions take up more space and need more resources to run. Your device would then not have the ability to handle that. Hence why there isn't (if it isn't in there) an update for the device listed in "Settings".
The only way you could add a newer version would be to root the device (which I so do not recommend) and try and add other versions after that. This, however, is not a good idea, and I personally never recommend doing it, as it can brick your device.
Your best option is to try clearing out the device and starting over. The reset you have done, if it is meant to keep what you have on the tablet, won't actually reset it. You would have better luck saving your personal stuff (files, photos, music, contacts, etc., just not apps, can't save those) to another place (google account, computer, etc.) and then do a "Hard Reset" of the tablet. This should clear it up.
NOTE: Doing this will clear 'all' the data on your tablet, so it is suggested you not choose this option unless you have to, or aren't worried about losing anything on the device.
Be sure you back up any data you want to keep, to a computer or cloud account, before doing the reset.
To "Hard Reset" the tablet...
1. Make sure that the tablet is actually powered off.
2. Remove your SD card, if there is one in the device.
3. Press the "Power" and the "Volume Up" buttons, together, until you see the start-up logo on the screen.
4. Once you can see the logo, release the buttons and allow the device to enter the "System Recovery Mode".
5. Next use "Volume Down" button to get to the "wipe data/factory reset" option.
6. When in recovery mode the "Volume Up" and "Volume Down" buttons are how to can navigate and highlight what option you need.
7. Once you have selected the "wipe data/factory reset", press the "Power" button to select that option.
8. On the following screen, repeatedly press the "Volume Down" button until the "Yes - delete all user data" option is what is selected.
9. Then press the "Power" button to hard reset the tablet.
10. If you took your SD card out in step 2, when the device is up and running again, reinsert the SD card.