In our non O365 instance, we would drag update list item onto the stage, and if it was a choice column, we could select the choice we wanted to update to...simple. Best example: status is "New", workflow needs to update that status to "Started" (which is available as a choice in that column). There doesn't seem to be a clear / easy way to get that done in the O365 version. Set Field in Current Item seems like an endless loop if you're looking to bump from one choice to another. Any ideas? In my head, it looks like Set Field: Current Item: Field (Status): here are your choices - what do you want to set it to?
Update List Item - how do I do it in Office 365 for a choice column?
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