How do I remove a virtual disc called 'update' from my MacBook?

An Etrecheck report will show the existence of "Update." Is that where you saw it?

It is part of Apple APFS that Apple introduced in macOS 10.15 Catalina, designed to make the file structure of Apple storage more secure.

Apple info here: Role of Apple File System - Apple Support

You don't remove it. It's needed.

If you ran Etrecheck because of a problem, please post the report. That's how EtreCheck was intended to be used. It will not reveal any personal or secure information.

Please see this excellent user tip on how to post long text reports like EtreCheck's into a forum response:

How to use the Add Text Feature When Post… - Apple Community

Please post the entire report. What seems insignificant to a new Etrecheck user can speak volumes to those of us who have reviewed thousands of those reports.  

There is a macOS system volume named "Update" which is normally hidden from view, but can sometimes be seen under certain conditions such as dual booting with an older OS or having made system modifications which have exposed the normally hidden volume.

Where are you seeing this virtual disk exactly?

Mac Virus are exceptionally rare these days.

Does it appear in the Disk Utility app?

Are you seeing it on the desktop?

Can you not drag it to the trash?

Did one of your apps recently get updated maybe and use the update package to update? Some updates may mount a a drive image for the update.

Provide more details and context and someone may be able to help.