Hello Mark,
Welcome to Atlassian Community!
That is a pretty generic error. If you enable debug logging and reproduce the issue, you should be able to see everything that is going on in the <Bitbucket home>/log/atlassian-bitbucket.log file. If you'd be willing to post the stacktrace from that, we could take a closer look, although from whatever error you see, you should be able to throw that into Google and get some information as to what could be causing it (that is if you don't feel comfortable adding the stack trace on this thread). We also have this application link document that also links to our troubleshooting guide that you can also take a look at. Would you also mind letting us know what versions of Bitbucket and Jira you are on? Ensure that both of those versions are compatible with each other's app link versions that you can check on this compatibility matrix document.
Shot in the dark though, I would take a look at any intermediary that sits between Bitbucket Server and Jira (load balancer, proxy, firewall, etc.) and see if there is anything misconfigured there (instead of staring at them for any misconfigurations, I would just bypass them all together and use the IP and port for the application link to see if you are able to make the connection work).
I wrote all that with the assumption that this occurs no matter what setting you put for the authentication, is that the case? If you don't use Oauth or don't use impersonation are you able to update successfully?
Regards,
Aaron Levinson
Dev Tools Support Engineer
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