Read the text file in via a Flat File source and write it to a staging table with an IDENTITY-column.
Use an Execute SQL Task with a T-SQL script that loops over your staging table, taking batches of something like 50.000 records and updating the destination table. That way you will use an update statement of only 50.000 records (or more or less, that's up to you), instead of the whole million.
Before each run, truncate the staging table.
p.s.: your caps-lock is broken