update manager reports the upgrade incompatible because powerpath is installed,
Hmmm... I read in the release notes of PP 5.8, that it is supported only from ESXi 5.1 EP1. Can you confirm if this is the version you are trying to upgrade.
To confirm on the long time taken, can you post the esxupdate.log for a better understanding where the process is getting stalled? Or are you performing any heavy IO during the update process which could include rescans also.