Don't worry this is easily solvable. Just follow the instructions and the update will install.
The update page warns that failure will happen if your recovery partition isn't large enough.
Right click on Start Button->Disk Management and you can see your current recovery partition size. Aim for a size of 1024 MB (1 GB) which works. Calculate 1024 - yourSize = sizeChange. In the instructions they use a sizeChange of 250. Replace that 250 by the number you just calculated. ex: if your current recovery partition size is 521. Calculate 1024 - 521 = 503. Use shrinkdesired=503 minimum=503 when they say shrinkdesired=250 minimum=250
- The update page mentions this page which explains how to enlarge your recovery partition
- Once your recovery partition is enlarged go back and install the update
Caveat:
On one of my 6 PC's the instructions in step 2 failed with error: "Windows RE image not found" (L. Heilig on page 7 mentions this rare error).
1b) Don't worry this also is easily solvable. Just follow these instructions and the update will install.
2b) Follow Method 3 in the page given in step 1b above (method 3 is easy and it works)
3b) Rebooting before installing the update was required in my case for the caveat case only
Just take your time and follow the instructions step by step. Copy paste is recommended to avoid typos.