Probably beyond what you'll be able to understand, but there's a series of errors in that extension and on the update server & file that Firefox looks at for determining compatibility of that extension with Firefox.

I just downloaded that toolbar installer from here - http://www.nectar.com/collect/nectar-search.points - and opened the executable.
Then I opened the Firefox extension nectar.xpi and looked at the install.rdf file.

 <em:id>{EBB6A13A-F162-47D8-8BAE-B587C99A6C0E}</em:id>
	<em:unpack>true</em:unpack>
	<em:version>1.0.3</em:version>
	<em:creator>AIMIA Coalition Loyalty UK Ltd</em:creator>
	<em:iconURL>chrome://id_aimia/content/48.png</em:iconURL>
	<em:description></em:description>
	<em:updateURL>https://download.toolbar.nectar.com/NectarToolbar/update.ff.xml</em:updateURL>
	<em:targetApplication>
		<Description>
			<em:id>{ec8030f7-c20a-464f-9b0e-13a3a9e97384}</em:id>
			<em:minVersion>0.7</em:minVersion>
			<em:maxVersion>10.*</em:maxVersion>
		</Description>
	</em:targetApplication>
		<em:name>Nectar Toolbar</em:name>
	<em:file>

Compatibility is set for Firefox 10 as the latest version in that extension.

The location specified for getting updates is - https://download.toolbar.nectar.com/NectarToolbar/update.ff.xml - shows this

<Description><em:version>1.0.3</em:version><em:targetApplication>
<Description>
<em:id>{ec8030f7-c20a-464f-9b0e-13a3a9e97384}</em:id><em:minVersion>0.7</em:minVersion>
<em:maxVersion>20.* <em:maxVersion>
<updateLink> https://download.toolbar.nectar.com/NectarToolbar/nectar.xpi </em:updateLink>

The maxVersion there is Firefox 20.

Then using that updateLink I see this:

 <em:targetApplication>
		<Description>
			<em:id>{ec8030f7-c20a-464f-9b0e-13a3a9e97384}</em:id>
			<em:minVersion>0.7</em:minVersion>
			<em:maxVersion>10.*</em:maxVersion>
		</Description>
	</em:targetApplication>
		<em:name>Nectar Toolbar</em:name>

and Firefox is told that Firefox 10 is the maxVersion for the Nectar Toolbar. 10 then 20 then back to 10 - that toolbar hasn't been compatible for quite awhile, the way I see what they're doing things.

The best I can offer is an extension that will override "compatibility" for that extension, and then see if it actually does work. It won't "fix" incompatibility, just allow to override a lesser maxVersion number.
https://addons.mozilla.org/en-US/firefox/addon/add-on-compatibility-reporter/

I have toolbar 1.0.3 and Firefox 26 on my desktop PC. The behaviour of the toolbar is erratic. Sometimes it works just fine. Other times it shows me the number of searches and points, but then asks me for my card number - which it must know already otherwise it wouldn't know how many points I had earned. On yet other occasions it just sits there asking me to enter my first search term, with all other fields (eShops, News, Nelp & Support) not responding to mouse clicks. If I use it to search (which for some reason does work) I get no points for the search. Sometimes it will work again aftrer restarting Firefox, but on other occasions I have to disable it then re-enable it to get it to work again. I have none of these problems with the earlier version of the toolbar which is still installed on my laptop.

Contact Nectar for help with their toolbar.

Worse than I reported above. The update.xml file wasn't even available when I just checked to see if that file had been updated in the last month.

I've sent them a copy of my post with a link to this thread. I expect that I will be told to clear my cache and browser history, and that sort of thing. Having worked in a software house, I have learnt never to expect a technically relevant reply from the help desk. However maybe they'll prove me wrong in this case. If I get a useful reply I'll post it here.

It's now exhibiting a new (undesired) behaviour. It repeatedly asks for the nectar card number, but no longer shows the number of points accrued (or says to enter the first search term). Occasionally it apologises that it can't register the Nectar card at the moment, but either way, it doesn't seem possible to get any points at all at the moment.

BTW I did get a reply, but it was just to the effect that they they were sorry that I was having a problem and would look into it.

There may well be a connection between these problems and the fact that it repeatedly loses my Nectar account password, requiring me to say that I have "forgotten" it and reset it - which sometimes works, sometimes not. The whole thing is more than a little bit flaky methinks.

I have now heard from Nectar and at last they admit that their new Search Toolbar won't work with the current release of Firefox. What a naff Company to release an update which is not compatible with one of the 3 main browsers in use today?!!

Thanks for your help in trying to sort this out.

I give up! Either I use IE and get Nectar points for searches and alerts for Nectar sites, or I give up on Nectar online and continue to use Firefox. Remind me this really is 2014 !!!

Barry