Very odd.
I have not had this problem in any of my upgrades.
Let's take this apart - the block template looks like this
<ul>
<{foreach item=download from=$block.downloads}>
<li>[<{$download.date}>] <a href="<{$xoops_url}>/modules/<{$download.dirname}>/singlefile.php?cid=<{$download.cid}>&lid=<{$download.id}>"><{$download.title}>a> li>
<{/foreach}>
ul>
You are correct, the <{$download.date}> value is what is being displayed as the published date for the download. The smarty being used just enumerates the different array values returned from the block code. The code returns an array - $block - which holds the titles, ids, published date, and wfdownloads directory for each download listed. There is no additional formatting done here - the formatting is done in the code that returns the array.
-> Template appears to be OK
The code that returns this information is in wfdownloads/blocks/wfdownloads_top.php using the function b_wfdownloads_top_show.
The line that fills the published date value is this one (line 50 in my copy) -
$download['date'] = formatTimestamp($download['published'], $wfModuleConfig['dateformat']);
formatTimestamp is defined in XOOPS_ROOT/include/functions.php. The first argument of the function is the timestamp to be formatted, the second is the format to use (and there is a third for the user's timezone offset).
Now, since you state the Recent News block is working correctly and it uses the same function (formatTimestamp), I will deduce that function is working correctly.
-> XOOPS functions appear to be OK
So, the question comes down to is the code in the block function OK and is the timestamp in the database OK?
Most likely, you database is OK, because the update does not impact the data, only the files.
Look for any 0 byte files in your wfdownloads directory and subdirectories. Then look at wfdownloads_top.
Good Luck!