None of the previous solutions worked for me.
The error in the CBS.log file was -
BFSVC: BfspCopyFile(C:\Windows\boot\PCAT\bootmgr, \\?\GLOBALROOT\Device\HarddiskVolume4\Boot\bootmgr) failed! (Attempt 1 of 60) Last Error = 0x70
My problem was that the hidden 100MB "System Reserved" partition was full.
Kaspersky Internet Suite was the culprit!!
I found a program that could delete files in the hidden partition -
http://www.coderforlife.com/projects/win7boot/extras/#OpenHiddenSystemDrive
that allowed the Hidden "System Reserved" partition to be seen in Windows Explorer and I deleted all the Kaspersky files freeing up 72MB.
The update then installed correctly.