What should be my first upgrade?

The best upgrade is yourself. You could spend $500 making your bike 50g lighter with titanium skewers or you could lose 5kg in a few weeks of hard riding.

You could try to make your wheels and derailleur go from 97% efficiency to 97.5% efficiency or you could increase your spin rate.

You could upgrade to a higher front sprocket and new rear derailleur or you could increase your VO2.

Etc.

You say that your bike is incompatible with your height. Upgrading won't fix that at all. You also say that you want to save weight, but you're riding a low-end bike with suspension forks and big fat tyres. If you're riding on the road or paved bike paths, you don't need either of those things.

By an overwhelming margin, your $400 would be best spent on a replacement bike; plus, selling your existing bike will give you a bit more to spend. You should be able to get a nice second-hand bike for $400, or a decent new one. If you do only ride on paved surfaces, consider a hybrid, which will give you a similar riding position to your mountain bike but will have narrower, lighter tyres and wheels, and probably a lighter frame. (NarrowER, but not particularly narrow – we're not talking skinny race bike tyres, here.)

With an inexpensive bike like this upgrading individual components not worth it. You can't really replace the frame - replacement frames do not exist at this price level.

If the bike is too small for you, you need a new bike. Either save for a whole new bike, or perhaps look at clothing and accessories that will make your riding more enjoyable and easier.

As everyone above points out, you'll pay double or triple to upgrade piecemeal. Save up buy a whole bike. Used if you have to.

The two items that I would consider are NOT on your list:

• If you are at the upper limit of your seat height, you might consider getting a longer seat post. It's hard to pedal if you're not getting good leg extension. (The frame is probably also too short for your torso+arms, but the legs matter more.)
• Clipless pedals and shoes. Your feet will thank you. Plus, you can carry them forward to your next bike.

You can also upgrade tires once these wear out.