Lots of talking points there.
No, there is absolutely no difficulty with a firmware update other than it resetting the on/off timers (if you use them). This is not the same as the recording schedule, the recording schedule is not affected. Your recordings are not affected. You will disconnect your hard drive, because you need the USB port in order to perform a manual update. For instructions click the "WIKI" link below.
1.02.20 is the latest official release, and is recommended. It's got iPlayer (if you hook up an Internet connection). The only major thing wrong with it (and this includes previous releases) is that if you are paying a media file by streaming from elsewhere on your home network, it is limited to 4GB. This problem is solved in the beta release 1.02.27, but that one comes with a raft of new wrinkles so is only worth installing if the 4GB limit is a problem for you.
You do not need a factory reset, but have you tried one to resolve your problem? This would kill your recording schedule, but is worth a try if nothing else works.
Power off (at the wall) for a good half hour (just to be sure).
Now let's get back to this issue of OTA updates. What do you mean "do not enable"? Unless you have the custom firmware installed (and you have not mentioned it) you do not have a choice. Without the dsable-ota package installed your only options would be:
Turn the power off overnight;
Disconnect the aerial overnight;
Restore 1.01.12 from USB every time it updates.
Unless you are doing one of these (or using the custom firmware - but I'm not sure there was a release for 1.01.12), I strongly suggest you are on 1.02.20 without knowing it. Menu >> Settings >> System >> System Information