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I had installed Xcode 4.1 on Lion and recently I saw the update for Xcode in the appstore. It was to update my current Xcode 4.1 to 4.2 with iOS5 SDK. It's around 1.8 GB of download and I did update it through app store. But at the end of the update, the update download restarted and I let it happen. But even after second download it restarted the download and started the updates downlad for third time.

I'm sure there is something wrong with something; either with OS or App Store or Xcode. Is anybody facing similar issue?

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Downloading Xcode from the AppStore actually downloads an installer package. I can't remember exactly where this downloads to since I've already moved mine to a backup drive in case I need to reinstall, but it's most likely /Applications.

Once this is downloaded, you need to run the installer to actually update your Xcode installation. It should be titled something like "Install Xcode.app". Run that and you should be OK.

You've likely downloaded that package 3 times already though, so check your /Applications folder before downloading it again. :)

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