I'm going to see if removing that folder helps. [EDIT] I tried removing that folder and running the install again through WU and I am still getting hung at 30%. I'm giving up on this update. Hopefully the next one does not require this update to be installed, otherwise, I'm stuck at the update I am currently at. I don't know what else to do.
Turn off or uninstall any third party anti virus, if you have any running. I never do an update with with AV in the background; it will always mess it up.
My next attempt, I will make sure my AV is disabled. My next attempt, I'll unplug all my USB devices (except my Keyboard and Mouse)