Well, my system exhibits the same symptoms. Click on update, and it simply terminates AHP, and it does not trigger the update. Running XP SP2. There is no such directory created in my Local Settings area, so no patch to execute.
And if I have to uninstall and reinstall in order to get this update, then I'll just skip it. It's not likely to improve things much anyway.
One thing you might want to also check and try... If you have any virus programs running shut them down. Along with fire walls that can give you a problem, virus programs can stop some downloads from executing.
(http://www.bdshost.com/X10/lpup.gif)---(http://www.bdshost.com/X10/lpup.gif)---(http://www.bdshost.com/X10/lpup.gif)---(http://www.bdshost.com/X10/lpup.gif)---(http://www.bdshost.com/X10/lpup.gif)----KDR