I got the above error when trying to install 3 particular updates on Vista. I rebooted, rescanned for updates and even downloaded the manual hotfix installers but still got a failure during install.
I found a command line posted by an MSFT Techie to type into a cmd prompt which fixed the issue:
1. Open a CMD prompt
2. In the command prompt, type the command below
fsutil resource setautoreset true C:\
(This assumes that C: is the drive in which Vista is installed. If it is
installed on another drive like D:, please change the drive letter
appropriately)
3. Reboot the machine
Problem solved
Just incase anyone else has a similar issue with WU.
I found a command line posted by an MSFT Techie to type into a cmd prompt which fixed the issue:
1. Open a CMD prompt
2. In the command prompt, type the command below
fsutil resource setautoreset true C:\
(This assumes that C: is the drive in which Vista is installed. If it is
installed on another drive like D:, please change the drive letter
appropriately)
3. Reboot the machine
Problem solved

Just incase anyone else has a similar issue with WU.