How to update the image available inside toolbox from fedora 40 to 41?

You missed a dash like toolbox --help

If you migrated to F41 it should take the default without parameters like:

toolbox create
toolbox enter

As long as your system is on F40 see syntax below

toolbox create --help  #see examples on the bottom of the help file.

Create the default Toolbx container for Fedora 41
       $ toolbox create --distro fedora --release f41

toolbox enter --help
toolbox enter --distro fedora --release f41

Here a link from our sponsor RH:

Works also on Fedora.

And the Fedora Manual Toolbx :: Fedora Docs

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