The
COFFEE MACHINE
Needs to be upgraded!
Quick explanation of how to solve (lots of pictures for step by step solutions):
Solving the nonogram gives us the layout of the sudoku, with red and blue squares.
The riddle tells us to replace the red with ‘X’ and blue with ‘V’. This gives us a ‘XV’ sudoku, which can then be solved.
Taking the yellow letters, and replacing a C with an M from the initials, gives an anagram of ‘coffee machine’. The initials also stand for this final answer!
Solution to the nonogram:

Steps:
1:

Start by simply filling in rows with large numbers that fill the whole row/column...
2:

Aha! A pattern! This makes it much easier, the next to fill in now all fill the whole row/column too, just a bit more obscurely...
3:

And finally, using the pattern, we can finish off the remaining rows/columns.
The riddle:
Crosses are ‘X’ and the V is in bold. These are Roman numerals. So, X is red and V is blue:
The red squares = 10 and the blue (violet) squares = 5
Now
There are 9 white squares in the not full rows/columns. The black lines actually represent the grid lines in the sudoku. And the red/blue is always in between two whites. So adding to the sudoku, we can put Xs and Vs on the grid where the numbers either side sum to the number 10 or 5:

Solving the new sudoku:
Steps:
1:

Using the X and V summations, we can start to fill in some numbers. Note that numbers either side of a V can only be 1, 2, 3 or 4...
2:

The yellow in the bottom left must be a 3 as a 4 would create two 6s in the row above. This allows us to complete the bottom left square...
3:

The yellow on the left must be a 1 as a 4 would create two 9s in the left most column. We can now complete another square...
4:

The top left can be almost completed, as swapping the top two numbers in each column would not work so this is the only possible configuration. The number in the middle top right can only 4 as 1, 2 and 3 don’t work...
5:

Top middle, top left must be a 3 which means the entire left hand side can now be completed...
6:

The middle row can now be filled as there are enough numbers to solve like a normal sudoku...
7:
The left of the V in the top right must be a 4, which allows us to fill in this square...
And from there we can fill in the rest as a normal sudoku:

Reading off the yellow letters gives
CHENAFEOIAECCF
The initials are also important. They tell us to
Replace one of the ‘C’s with an ‘M’. The initials are also the initials of the final answer.
After doing this, we get an anagram (credit Zimonze) of
Coffee machine!