This may get you off the hump.
Replace #HolderTable with the name of your table.
SELECT T2.myAlias.query('./../PriceLevel[1]').value('.' , 'varchar(64)') as MyXmlFragmentValue
FROM #HolderTable
CROSS APPLY OrderXML.nodes('/InternalOrderDetails/InternalOrderDetail/Item_Number') as T2(myAlias)
SELECT T2.myAlias.query('.') as MyXmlFragment
FROM #HolderTable
CROSS APPLY OrderXML.nodes('/InternalOrderDetails/InternalOrderDetail/Item_Number') as T2(myAlias)
EDIT:
UPDATE
#HolderTable
SET
OrderXML.modify('replace value of (/InternalOrderDetails/InternalOrderDetail/PriceLevel/text())[1] with "MyNewValue"')
WHERE
OrderXML.value('(/InternalOrderDetails/InternalOrderDetail/PriceLevel)[1]', 'varchar(64)') = 'FREE'
print @@ROWCOUNT
Your issue is the [1] in the above.
Why did I put it there?
Here is a sentence from the URL listed below.
Note that the target being updated must be, at most, one node that is explicitly specified in the path expression by adding a "[1]" at the end of the expression.
http://msdn.microsoft.com/en-us/library/ms190675.aspx
EDIT.
I think I've discovered the the root of your frustration. (No fix, just the problem).
Note below, the second query works.
So I think the [1] is some cases is saying "only ~~search~~ the first node".....and not (as you and I were hoping)...... "use the first node..after you find a match".
UPDATE
#HolderTable
SET
OrderXML.modify('replace value of (/InternalOrderDetails/InternalOrderDetail/PriceLevel/text())[1] with "MyNewValue001"')
WHERE
OrderXML.value('(/InternalOrderDetails/InternalOrderDetail/PriceLevel[text() = "NONFREE"])[1]', 'varchar(64)') = 'NONFREE'
/* and OrderXML.value('(/InternalOrderDetails/InternalOrderDetail/Item_Number)[1]', 'varchar(64)') like '%COTRGUID' */
UPDATE
#HolderTable
SET
OrderXML.modify('replace value of (/InternalOrderDetails/InternalOrderDetail/PriceLevel/text())[1] with "MyNewValue002"')
WHERE
OrderXML.value('(/InternalOrderDetails/InternalOrderDetail/PriceLevel[text() = "FREE"])[1]', 'varchar(64)') = 'FREE'