I had a similar problem but just busted it. I wanted to do a clean install of my Win7-Ultimate(64) to upgrade a computer to Win10, while I still could. Although the install media is SP-1, there are still about 250 important and optional updates to catch up on (hello SP2?). As soon as the new install was done, I tried to update - left it running for over 24 hours - with no progress after "searching for updates." After doing some research, several people had good results with downloading KB3102810(update client improvements for speed), KB3138612(latest Update Client) and KB947821(SUR Tool) and installing in that order to improve update speed.
However, when I tried them, the process stalled at "Standalone Installer is searching for updates on this machine." I noticed that the updates were creating a "sandbox" folder in the root, but it appeared that it could not find the cab, etc once it did. So, I rebooted to stop all of the update processes and then used the Package Manager in the following manner. I deleted the previous locked folders (with names like "C:\42c85776e1df4d1b8b5495" etc.) so I knew which update I was working with. I launched KB3102810 and then closed the window from the taskbar when it stalled. I opened a cmd window (as administrator) in the new protected folder (C:\42c85776e1df4d1b8b5495) and did a directory to find the *.xml file, which is the command file for the Package Manager (and in this case is "Windows6.1-KB3102810-x64.xml"). I then ran the Package Manager with the command:
pkgmgr.exe /n:Windows6.1-KB3102810-x64.xml
Shortly after, I got a message that the Package Manager needed to restart the computer - HOORAH!
I allowed the system to restart and then repeated the same procedure for KB3138612 (folder was called C:\1503477940f2dae5bbe33a246dcc this time). Again, I got the message that Package Manager needed to reboot the computer,so I did.
When I started the procedure for the SUR Tool, the process did not stall,but instead made it all the way through. Apparently installing KB3138612 had fixed whatever issue was preventing the Standalone Installer from finding the updates once expanded. Not only did the update make it through, but now even without a restart, the windows update page showed 194 important and 67 optional updates available. I let update start and left the computer overnight and it was waiting this morning for me to restart. It did a 5 phase update during shutdown and restart. I had 9 updates remaining that had either not been selected or had initially failed, but those installed fine on the second attempt and I am now writing this on the fully updated computer.