Do you have an adapter cable that will connect the USB port on your computer to the serial port on the TIU? If you do, use it and don't bother with a USB A/B cable. If you use the adapter cable, you must power the TIU by either applying power to FIXED 1 or the AUX port. If you use a USB cable, it should provide enough power for the TIU to upgrade (but not to operate a layout). When using the USB cable, I would connect it after you have the 1/8" stereo connector in place, not before.
You will not have to reset the TIU. You will have to upgrade it to version 5.0.
Once you update and reset the remote, it will have every feature that a brand new remote will have. Do be aware that Quillable whistle is an in-loco feature, not a feature that comes about through the use of 5.0.