Hi John,
Thanks for the question. Actually the Forest library gives you the option of importing the objects into the scene file, in which case there is no link back to the original file, or creating a XRef to the library files. You can choose this from the library browser as shown below.
If you choose to XRef then updates to the library files should be reflected in your scene (after a refresh). For the built in libraries this option is disabled so that we can change the source files without disturbing user's scenes, but for your own libraries it should be available.
If you have merge the objects then you will need to reimport the library object or preset into the scene, effectively replacing it, in order for the changes to take effect. To do this, go to the forest object in the forest_render.max file and open the Library browser. Select the preset or objects from the items grid (theres no need to edit the library itself) and click import selected to replace those already in the scene. For materials, make sure you have Replace from library selected otherwise the existing materials will be retained.
I hope that helps, please let me know if anything needs clarifying.
Many thanks,
Paul