Oh yeah SP1 u cant install because Security Essentials is installed Ha ha ha... Wait windows updates doesnt show any updates for security essentials and it doesnt appear to be running under process NO WAY....
yeah it was a Houdini issues. Luckily I stumbled on a MS article telling that the anti virus program can cause the sp1 to fail on update.
Sure enough only place to see it was there was under add/remove programs.
Got rid of it and now sp1 is installing.
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