Try all of the following, especially checking the windows services settings for any of those listed being disabled.
Method 1: You may run Windows Update troubleshooter and then check using the Windows Update troubleshooter in Windows 7.
Open the Windows Update troubleshooter
http://windows.microsoft.com/en-US/windows7/Open-the-Windows-Update-troubleshooter
Method 2: Reset Windows update components and then check if it helps.
How do I reset Windows Update components?
http://support.microsoft.com/kb/971058
Note: This section, method, or task contains steps that tell you how to modify the registry. However, serious problems might occur if you modify the registry incorrectly. Therefore, make sure that you follow these steps carefully. For added protection, back up the registry before you modify it. Then, you can restore the registry if a problem occurs. For more information about how to back up and restore the registry, click the following article number to view the article in the Microsoft Knowledge Base.
How to back up and restore the registry in Windows:
http://windows.microsoft.com/en-US/windows7/Back-up-the-registry
Method 3: You may try to manually start Windows Update, Background Intelligent Transfer Service (BITS) and Cryptographic service.
a. Click Start, type services.msc in start search and press enter.
b. In services window scroll down to Windows Update Service.
c. Right click on the service and click on Properties.
d. Make sure the Startup type is set to Automatic and Service Status is started.
e. Click Apply and ok.
You may repeat the above steps for Background Intelligent Transfer Service (BITS) and Cryptographic service.
Method 4: You may also try performing a SFC scan on the computer which would scan for corrupt system files on the computer and replace them.
SFC/Scannow:
http://www.eightforums.com/tutorials/3047-sfc-scannow-command-run-windows-8-a.html
Try installing again after applying each of the above steps.