In case anyone else has the same problem - I downloaded the patch manually and tried to install it, and it popped up with an error about a pre-requisite - It complained about Microsoft Windows not installed on the Server!! Duh - I'm trying to UPDATE Windows with a security patch and now I get this crap error!!!
Anyways, I manged to get an answer which worked:
http://www.geekzone.co.nz/freitasm/500
Thanks Mauricio Freitas.
Simply add:
Microsoft Windows"=dword:00000000
In the following:
[HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Shared Tools\Web Server Extensions\5.0\Setup Packages]
Worked like a breeze! :P