>>To repeat : The Update command is constructed based on the Select command
>>
>>You're selecting everything so it's updating everything.
>>
>My point is - why does it even update PK column and why does it construct such ugly where clause?

It updates the PK because it is in your Select command.

>Assuming I will only change the UpdateCommand.CommandText manually, will it still work?

Yes, but what's the point.
You should refine the Select command to only retrieve the fields that you want included in the Update command.

Did you actually read the documentation?