I had the same problem with Windows Update failing to install KB4054517. I've spent weeks trying to shake this off with all sorts of jiggery pokery from numerous websites. Today, I followed your steps in disabling Windows Update (via 'Services'), restarting my PC and then manually running the KB4054517 msu file I downloaded from the Microsoft Update Catalogue. It worked first time. Thanks for sharing your fix with us all.
Stating that you should reset your system, is not an answer to someone having spent hours installing and using software, just to have an update make it fail. It's not so simple to just treat your data without regard to time spent to reinstall all of your Windows 10, from square one. It should not be so risky.
When you have work to do, you expect to be able to complete it in a timely manner, not spend hours of time, reinstalling applications and attempting to rebuild the end users work and the world.