I have two lists. List 1 is Project Dashboard (has information about different projects such as project name, status, phase percent complete, project manager, etc) and list 2 is Project Review (has information around the project and the quality review info such as project name, status, quality review date, quality review outcome, etc). I have created a workflow using the Create Item when an item in List 1 is added it creates a new item in List 2 using list 1's information (project name, status, and List 1 Id (this is the ID SparePoint assigns for each item)). I would like to have a workflow update List 2 if any of the information in List 1 changes for example if the status changes from active to on hold. I tried creating a workflow using Update item but it is not working. Is it possible to update List 2 when List 1 is updated using workflows?
yes you can. When you create item in list 2 keep a lookup column pointing to ID for list 1. So when any changes are made to list 1 search for the item in List 2 with column values as List1_ID. This approach will work assuming you have only 1 item in list 2 corresponding to list1.
I would add an event receiver to List 1 with an item updated event. You can use the event to perform actions on the second list based on the altered information in List 1.