Customers have reported issues installing KB2572067 on some of their devices –Windows Update keeps installing the package over and over again, and installing it manually produces a System Exception error window displayed, Error Code: 65535, Error Message: System Error once you try to run it.
It appears to be unique to the logic of the update itself- see the following links from previously resolved bugs with similar symptoms:
The update can be installed successfully using the following steps:
Install .NET Framework 1.1 redistributable
Install .NET Framework 1.1 SP1 (KB867460)
Download KB2416447 and save to disk, but do not run the update directly
Extract the contents of NDP1.1sp1-kb2416447-x86 to a local folder. To do this perform the following command from a command shell.
NDP1.1sp1-kb2416447-x86.exe /extract c:\kb2416447 This will extract the file ndp1.1sp1-kb2416447-x86.msp from the EXE and place it in the folder c:\kb2416447
NDP1.1sp1-kb2416447-x86.exe /extract c:\kb2416447
This will extract the file ndp1.1sp1-kb2416447-x86.msp from the EXE and place it in the folder c:\kb2416447
Now run ndp1.1sp1-kb2416447.msp either from the command shell or by double clicking on the msp file in explorer. This should allow KB2416447 to install successfully.