I have run into this issue recently with updates on several Windows 7 embedded thin clients. The error code translates to a corruption in the Windows component store.
Running "sfc /scannow" on the systems indicated that it did find errors, but could not fix them.
The System Update Readiness tool (KB947821) was successful in repairing component store problems in all cases for me. The download link is https://support.microsoft.com/en-us/kb/947821.
After installing the patch, running Windows Update again to install patches was successful.