I had this issue once. Here's what you do:
If you are still at the installing updates issue:
Try getting into Safe Mode. If possible:
In the "C:\windows\winsxs" folder, there should be a file called pending.xml. Rename that file to pending.old. Now reboot your computer.
It should finish the updates correctly.
I'm pretty sure if you can get into Safe Mode you can get into the folder to get to this file.
If you're not able to get into Safe Mode, Windows' site has an indepth way to get this problem solved:http://support.microsoft.com/kb/949358
Go to Method 3.
Edited by Polantaris, 07 September 2009 - 02:22 PM.