I think the OP is just confused on what the svn folder and that setting do.
An svn folder accidentally slipped into Grid when updating. Normally, these get deleted when the file is uploaded from the author's computer to the wowace repository. What the "skip svn working copies" setting in WAU does, is prevent an author's working copy (one that they - or a user - may have made changes to) from being overwritten by the file on the wowace repository.
Just delete the svn folder in your Grid folder and you'll be able to update normally.
i created the .svn folder myself. i'm using the version with pet support from Jerry. i wanted to be able to update Jerry's version w/o having to download each individual file each time.
say i have .svn folder created under Grid, which then gets listed under the SVN section in WAU, if i choose to not skip SVN in the Preference, would it update Grid with the regular version or the SVN version?
if it's the former and not the latter, the only way to update SVN addons is to download and each individual files?