Even i had the same problem....this was the solution given to me by Microsoft Product Support Services (PSS).
There are 2 main ways to solve your problem
STEP 1:
Generally, if you are unable to install this update then the possible cause could be due to corrupt Spupdsvc.exe file. Please follow the steps mentioned below to resolve the issue:
- Click on Start and click on Run.
- Type C:\Windows\System32 and click OK.
- Look for spupdsvc.exe and rename it to SpupdsvcOld.exe.
- Restart the computer and try installing the update by clicking on the link below:
http://www.microsoft.com/downloads/details.aspx?FamilyID=50c334e1-9a67-4b99-a65a-069b79267856&DisplayLang=en
You will get more information in the link below:
http://support.microsoft.com/kb/916246/en-us
NOTE: Please turn OFF your Antivirus and Firewall for temporarily so that you can perform Windows Update. Sometimes they block the access to Windows Update site.
STEP 2:
1. Click Start, click Run, type “cmd” in the Open box, and then click OK.
2. At the command prompt, type “net stop wuauserv”, and then press ENTER.
3. Click Start, Run, and type “%windir%” and press Enter.
4. In the opened folder, rename the folder SoftwareDistribution to SDold.
5. Type “net start wuauserv”.
6. Use the Windows Update Web site again to install updates.
If the issue persists after following the above suggestions try using Microsoft Product Support Services (PSS).
Source:- Microsoft Product Support Services (PSS).