Installing Printer update driver WindowsUpdate 80070003"

What printer?  What operating system? What problem are you having?

Please give us a Microsoft link to that update. I do not recognize the number.

... Thinkpads_User

That was quick,  I was not finished editing the question.  Windows 7 Premium, HP Desk Jet 812. It will not install.  The windows update says an updated driver available. When I try to install it. I get this error. I also get the same error when I try to trouble shoot.  See attachments

I had an old HP Deskjet 812C and it worked on my Windows 7 system. Here is how to do it.

Go to Devices and Printers. Click on Add a Printer, Next, Use existing connection. Now in the screen that opens where you see Have Disk (lower right), see the Windows Printer Update button beside it.

Click on Printer Update and allow it to finish. It may take as much as 15 or 20 minutes. When done, do NOT select a printer but cancel.

Close out all the printer windows.

Now go back to Devices and Printer, Add a Printer. This time you should be able to click on HP and scroll down the right hand side to Deskjet 812 and install it.

You probably should physically connect the printer now and see if it will print a test page. The 812 will work (done it) but it is not a smart printer so you have to do the work.

.... Thinkpads_User

I've did that before I posted the question and I also just retried it and it still will not install :(

The next step is to see if there is a failed driver installed.

Go to Devices and Printer. Click once on any printer so that a new menu opens. Click on Printer Server Properties and then the Drivers Tab.  Now scroll down the list and find the 812 driver. Delete the driver (and all, if more than one 812 driver).

Close out and restart.

Now try installing again.

... Thinkpads_User

pcorathers--
Perhaps of help
http://support.microsoft.com/kb/910336

Frankly, I am not too fond of MS updates for peripheral devices.  Better to go to the HP site and see what updates are available from there.
http://h10025.www1.hp.com/ewfrf/wc/softwareCategory?cc=us&dlc=en&lc=en&product=58152&

http://answers.microsoft.com/en-us/windows/forum/hardware/while-trying-to-install-the-driver-update-for-hp/d1d3b7e1-e136-4bff-8835-572779440d60?msgId=afc27488-dfb2-4d3b-9daf-a720f53da24a

The HP 812 is very old (goes back to DOS and early Windows). In my case, the Windows Printer update was the only way to install it.

@pcorathers - What happened when you delete the actual printer driver?

... Thinkpads_User

I am thinking there is some unique to this machine. The printer installed ok on another machine. and I tried to install a an HP841C on this machine and get the same error. Also when I tried to some other hardware drivers and when I try to run troubleshoot, and do some other updates they fail and give me the same error. I think these are all related. I think the is some sort of "service" that needs turned on.

Try running System File Checker. Run SFC /SCANNOW and allow to complete. Run again if errors remained. Restart and test.

It looks like this is an evolving question - since I get the same error when trying to do other things like the trouble shooting -- I think there is some sort of common issue?  
I ran sfc  that did not resolve the issue.

I thought the sfc completed but I watched it andit stopped at 15% so I am not sure it completed

pcorathers--
Try a Repair Install
http://www.sevenforums.com/tutorials/3413-repair-install.html

It should not affect your installed programs or personal data, but it never hurts to backup first.

Wow!  thinkpads_user beat me by 43 seconds.

I know he is quick :) but I will give you some credit if that works. I will not be able to get to till this evening as I have to get SOME real work done today.

I started in safe mode with a command prompt and ran  sfc /scan now
It stopped at 14% with an error. "windows resource protection could not perform the requested operation"

I ran sfc /verify - I have pasted the log below

2013-06-24 08:21:11, Info                  CBS    Starting TrustedInstaller initialization.
2013-06-24 08:21:11, Info                  CBS    Loaded Servicing Stack v6.1.7601.17592 with Core: C:\Windows\winsxs\amd64_microsoft-windows-servicingstack_31bf3856ad364e35_6.1.7601.17592_none_672ce6c3de2cb17f\cbscore.dll
2013-06-24 08:21:13, Info                  CSI    00000001@2013/6/24:15:21:13.877 WcpInitialize (wcp.dll version 0.0.0.6) called (stack @0x7feed46f0ad @0x7fef98a9849 @0x7fef98734e3 @0xff6fe97c @0xff6fd799 @0xff6fdb2f)
2013-06-24 08:21:14, Info                  CSI    00000002@2013/6/24:15:21:14.227 WcpInitialize (wcp.dll version 0.0.0.6) called (stack @0x7feed46f0ad @0x7fef98f6816 @0x7fef98c2aac @0x7fef98735b9 @0xff6fe97c @0xff6fd799)
2013-06-24 08:21:14, Info                  CSI    00000003@2013/6/24:15:21:14.237 WcpInitialize (wcp.dll version 0.0.0.6) called (stack @0x7feed46f0ad @0x7fefa348738 @0x7fefa348866 @0xff6fe474 @0xff6fd7de @0xff6fdb2f)
2013-06-24 08:21:14, Info                  CBS    Ending TrustedInstaller initialization.
2013-06-24 08:21:14, Info                  CBS    Starting the TrustedInstaller main loop.
2013-06-24 08:21:14, Info                  CBS    TrustedInstaller service starts successfully.
2013-06-24 08:21:14, Info                  CBS    SQM: Initializing online with Windows opt-in: False
2013-06-24 08:21:14, Info                  CBS    SQM: Cleaning up report files older than 10 days.
2013-06-24 08:21:14, Info                  CBS    SQM: Requesting upload of all unsent reports.
2013-06-24 08:21:14, Info                  CBS    SQM: Failed to start upload with file pattern: C:\Windows\servicing\sqm\*_std.sqm, flags: 0x2 [HRESULT = 0x80004005 - E_FAIL]
2013-06-24 08:21:14, Info                  CBS    SQM: Failed to start standard sample upload. [HRESULT = 0x80004005 - E_FAIL]

You probably need to try a Repair Install on this machine. SFC always completes for me, so I assume that it does not complete is symptomatic of other issues.

.... Thinkpads_User