Hello,
Whilst I'm not using Update record (v3) like yourself, I also ran into this error using Create record. When creating a Salesforce record, one of the fields I was trying to populate via Power Automate was also a search field in salesforce. If I entered any text I was getting a "id value of incorrect type:"
Some fields in salesforce can only accept certain ID types/values. The ID value can be found in the URL. So I had to go into Salesforce record and complete the search manually for that field. Once the search returned a value, I saved the record and then I clicked on that value and the URL displayed the ID I needed.

The final result in my Create record in Power Automate looked like the below

Hope that helps.
This article gave me the clue that I needed to use some specific ID rather than typing in the name myself.
https://developer.salesforce.com/forums/?id=9062I000000QzBOQA0