Take a look at the MS article ... How to troubleshoot Windows Update or Microsoft Update when you are repeatedly offered an update
Another option would be to make sure the update was installed... then go to Windows/Microsoft Update... see the offending repeating update and set it to be hidden.
Yet another option would be to again make sure the update was indeed installed. Then go to Control Panel>Add/Remove Programs and remove the update...
Then go to http://www.microsoft.com/downloads
" target="_blank" rel="nofollow"> http://www.microsoft.com/downloads
and key in the KB value (KB954430) in the search box next to the All download box.
That will take you to the page you'll see the download link for your update, click on that to go to the ACTUAL DOWNLOAD SITE for the update. From there download the update don't run it save it MANUALLY to a folder or desktop for later install.
Close down all programs and manually run the application. If asked to do normal install or custom pick custom and select global instead if side by side and then next. If any programs interfere with install select ignore. and finish it on out. You will see that it is a much better install than what the windows update manager does.
Don't forget to reboot to make sure all files get updated.