I've had a couple of installations of Windows updates fail recently especially when trying to install Service pack 1.
The last attempt was on a brand new virtual server, so I knew nothing else could be causing the problem except something Microsoft related.
When checking the event log I found event ID 8 - Service Pack installation failed with error code 0x800f0818
According to other blog posts some files in the packages directory have become corrupt.
You need to install the System Update readiness tool which will give you a log to determine which files are corrupt. The installer is available here : http://support.microsoft.com/kb/947821
Sometimes the installation of the readiness tool alone will fix the issue.
Open checksur.log file under %windir%\Logs\CBS. Look for something similar to :
Unavailable repair files:
If there are no errors then try the servicepack again otherwise you may need find the offending files take ownership and replace them with those from another server that works.