This happened to me. I called NI, worked with an Applications Engineer, and managed to solve this myself by (a) uninstalling LabVIEW, and (b) reinstalling it. Curiously, on four machines that had nearly identical LabVIEW systems, one updated without trouble, but the other three had this Update error. I'm not sure where the problem lies, but it probably is a glitch in the Update system (I had a similar problem a year or two ago).
I probably spent twice as long "fussing" with trying to get Updates to work than the time it took to Uninstall/Reinstall (curiously, the Uninstall seemed to take about as long as the Install). Once I reinstalled, the Update Service ran and everything worked fine after that.
