I have no idea what may be causing your problem, but you could try getting the update from the Windows Catalog site and see what happens;
http://support.microsoft.com/kb/323166/en-us
If this works, you will be able to download an .exe file which you just doubleclick on to install. Be sure to read the instructions before using this method.
Alternatively, you could check your Add/Remove list first, just in case the update is already there, or you could run the Secunia Online Inspector, which will confirm whether or not the patch is missing. You will need an up to date version of Sun Java before the Inspector will run;
http://secunia.com/vulnerability_scanning/online/