I checked out the following:
I've no problem downloading the updates. I just can't install them.
I followed the procedure in KB304498.
Deleted the contents of Internet Explorer cache folder, cookies, history and operating system temp folder.
Installed MS Windows Script 5.6 for XP.
I then attempted to install the updates. No luck - both files (Office2003SP2-KB887616-Client-ENU.exe and Office2003SP2-KB887616-FullFile-ENU.exe) gave the same error message.
I then deleted Offfice Update detection folder (C:\Program Files\OfficeUpdate11)
Turned off ZoneAlarm, Spybot and everything associated with it.
I went to Add/Remove programs and repaired the installation of MS Office Basic 2003.
I tried again to install SP2 - using both the the update files - and again got the error message to the effect: The Update Cannot Be Installed".
Enthusiast refered me to a MS Support site. I couldn't figure out how to contact Microsoft from where I'm located. They don't make it easy.
I'm rapidly running out of options.
Again, thanks to all.