The subject behavior will occur if the version of Update.exe used to install is earlier than and the %SystemRoot%\Inf\Branches.inf file has the read-only attribute set.

NOTE: You may be prompted to retry or cancel the operation.

To resolve this problem:

1. Open a CMD.EXE window.

2. Type the following command and press Enter:

attrib –r %SystemRoot%\Inf\Branches.inf

3. Re-apply the hotfix.