Apple Watch (1st gen) & iPhone 5c pairing problem. Stuck on Software update. (details in comments)

Would appreciate any help on this!

I am trying to pair my watch with the phone.

I have a 5c (on ios 10.3.3) & and (second hand) 1st gen Apple Watch (WatchOs 2.0.1)

See video here: https://www.reddit.com/r/AppleWatch/comments/726v90/apple_watch_1st_gen_iphone_5 c_pairing_problem/

*Steps I take when pairing my phone:*

1. I take a photo/point screen at device.
2. Screen on iPhone then prompts "Update Your Apple Watch" "To finish pairing , your apple watch must be running the latest version of watchOS." "Update Now (button)" "Skip the Update and exit Setup (yellow text)" Screen on Watch is the orbit emblem with watch particulars in circle
3. I Click Update Now on iPhone
4. On iPhone it states "Activating Apple Watch, this may take a few minutes" - Then immediately it says checking for Update...

**HERE IS WHERE THE PROBLEM OCCURS**

I am not able to get past the "Software Update" screen. The phone then indicates that my "software is up to date" with WatchOS 2.0.1 (Which we all know is not the latest version) The phone doesn't complete pairing because it gets stuck on the software update screen. (See 52s mark in Video). The only option is to hit "Cancel" in top left (yellow text) and pick either "Exit Update" or "Continue Update". Exiting Update unpair's the Apple Watch and resets it to factory settings and "Continue Update" does nothing, sits on the same screen saying "software is up to date".

*Steps I've taken to resolve, that haven't fixed the problem, (that i've found on the internet):*

• I have updated to the latest iOs on the 5c.
• Deleted all beta profiles from 5c
• Rebooted many times (both the apple watch & 5c)
• Erased all Content & settings (2 times)
• Reset Network Settings (3 times)
• Reset Apple Watch from setup screen (many times)

I am now at a loss for what to do... please help? Thanks in advance!!