I noticed SQL updates (KB960089 but also SQL SP3) were failing to apply on the WSS Developer VM.
After many hours of frustration, I located this great blog post that helped me to overcome the issue: http://blogs.msdn.com/sqlserverfaq/archive/2009/01/30/part-1-sql-server-2005-patch-fails-to-install-with-an-error-unable-to-install-windows-installer-msp-file.aspx
In my case, the missing .msi's were from SQL Developer edition. The missing .msp's were from SQL SP2 & KB948109.
Here's the download location for SQL KB948109:http://download.microsoft.com/download/7/c/7/7c7e394d-ddbf-4f2a-9e86-cf054e04931d/SQLServer2005-KB948109-x86-ENU.exe
Windows SharePoint Services 3.0 SP1 Developer Evaluation VPC Imagehttp://www.microsoft.com/downloads/details.aspx?displaylang=en&FamilyID=1beeac6f-2ea1-4769-9948-74a74bd604fa
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