here is the log that gets generated when it fails:
14:43:12| Info| === Managed setup logging started: 3/21/2009 2:43:12 PM ===
14:43:12|Verbose| Method entry: Microsoft.Crm.UpdateWrapper.UpdateSetup.Initialize
14:43:12|Verbose| Method entry: Microsoft.Crm.Setup.Common.SetupBase.Initialize
14:43:12|Verbose| Method exit: Microsoft.Crm.Setup.Common.SetupBase.Initialize
14:43:12|Verbose| Method exit: Microsoft.Crm.UpdateWrapper.UpdateSetup.Initialize
14:43:12|Verbose| Method entry: Microsoft.Crm.UpdateWrapper.UpdateSetup.Run
14:43:12|Warning| The specified /config file config.xml won't be used
14:43:13|Verbose| Method entry: Microsoft.Crm.Setup.Common.SetupBase.Run
14:43:13|Verbose| Method exit: Microsoft.Crm.Setup.Common.SetupBase.Run
14:43:13|Verbose| Method entry: Microsoft.Crm.UpdateWrapper.UpdateSetup.VerifyRequiredKBsAreInstalled
14:43:13|Verbose| Method exit: Microsoft.Crm.UpdateWrapper.UpdateSetup.VerifyRequiredKBsAreInstalled
14:43:13| Info| Window Left: 200
14:43:13| Info| Window Top: 200
14:43:26| Info| InstallInfo.AdminTargetFolder:
14:43:26| Info| InstallInfo.AllowRun: True
14:43:26| Info| InstallInfo.CleanupRequired: False
14:43:26| Info| InstallInfo.ConfigFile: config.xml
14:43:26| Info| InstallInfo.CreateDatabase: True
14:43:26| Info| InstallInfo.CurrentFolder: c:\eddaf264448e669cb1a6c7ebdec2
14:43:26| Info| InstallInfo.InstallAlways: False
14:43:26| Info| InstallInfo.InstallingPackage: c:\eddaf264448e669cb1a6c7ebdec2\Server_i386.msp
14:43:26| Info| InstallInfo.InstallType: Install
14:43:26| Info| InstallInfo.LocalPackage:
14:43:26| Info| InstallInfo.LogFile: C:\Documents and Settings\cirujales\Application Data\Microsoft\MSCRM\Logs\KB961768.log
14:43:26| Info| InstallInfo.PackageName: Server_i386.msp
14:43:26| Info| InstallInfo.RebootRequired: False
14:43:26| Info| InstallInfo.SharedInstall: False
14:43:26| Info| InstallInfo.SourceFolder: c:\eddaf264448e669cb1a6c7ebdec2
14:43:26| Info| InstallInfo.SuppressReboot: False
14:43:26| Info| InstallInfo.TargetFolder: C:\WINDOWS\$CrmUninstallKB961768_Server$
14:43:26| Info| InstallInfo.UIMode: Full
14:43:26| Info| InstallInfo.UserCancel: False
14:43:26| Info| IpcInfo.NoLock: True
14:43:26| Info| ProductInfo.ExistingLanguage: 1033
14:43:26| Info| ProductInfo.ExistingProductCode: bc8dd950-8100-42f4-9ea9-26fcd41690af
14:43:26| Info| ProductInfo.ExistingVersion: 4.0.7333.3
14:43:26| Info| ProductInfo.InstallState: Local
14:43:26| Info| UpdateInstallInfo.Auto: False
14:43:26| Info| UpdateInstallInfo.Component: Server
14:43:26| Info| UpdateInstallInfo.ComponentInfo: Microsoft.Crm.UpdateWrapper.ServerInfo
14:43:26| Info| UpdateInstallInfo.DbHotfix: True
14:43:26| Info| UpdateInstallInfo.KBNumber: KB961768
14:43:26| Info| UpdateInstallInfo.LanguageID: 1033
14:43:26| Info| UpdateInstallInfo.PatchID: {3E804A41-B038-4FA7-94CC-C40CC3EAC5D4}
14:43:26| Info| UpdateInstallInfo.PublishReports: None
14:43:26| Info| UpdateInstallInfo.ReleaseType: Update Rollup 3
14:43:26| Info| UpdateInstallInfo.Revision: 1408
14:43:26|Verbose| Method entry: Microsoft.Crm.UpdateWrapper.UpdateSetup.Install| System.Collections.Hashtable
14:43:26|Verbose| Method entry: Microsoft.Crm.UpdateWrapper.HotfixMspInstaller.Install
14:43:45| Info| This patch package could not be opened. Verify that the patch package exists and that you can access it, or contact the application vendor to verify that this is a valid Windows Installer patch package.
E:\Server\i386\Server.msi
14:43:45| Info| InstallerException: 1635
14:43:45| Error| System.Exception: Action Microsoft.Crm.UpdateWrapper.MspInstallAction failed. ---> Microsoft.WindowsInstaller.InstallerException: This patch package could not be opened. Verify that the patch package exists and that you can access it, or contact the application vendor to verify that this is a valid Windows Installer patch package.
at Microsoft.WindowsInstaller.Installer.ApplyPatch(String patchPackage, String installPackage, InstallType installType, String commandLine)
at Microsoft.WindowsInstaller.Installer.ApplyPatch(String patchPackage, String commandLine)
at Microsoft.Crm.UpdateWrapper.MspInstallAction.Do(IDictionary parameters)
at Microsoft.Crm.Setup.Common.Action.ExecuteAction(Action action, IDictionary parameters, Boolean undo)
--- End of inner exception stack trace ---, Error, RetryCancel, Option1
14:43:59| Info| InputResult: Cancel
14:44:09| Info| InstallerException: Action Microsoft.Crm.UpdateWrapper.MspInstallAction failed.
14:44:09| Error| Configuration exception.System.Exception: Action Microsoft.Crm.UpdateWrapper.MspInstallAction failed. ---> Microsoft.WindowsInstaller.InstallerException: This patch package could not be opened. Verify that the patch package exists and that you can access it, or contact the application vendor to verify that this is a valid Windows Installer patch package.
at Microsoft.WindowsInstaller.Installer.ApplyPatch(String patchPackage, String installPackage, InstallType installType, String commandLine)
at Microsoft.WindowsInstaller.Installer.ApplyPatch(String patchPackage, String commandLine)
at Microsoft.Crm.UpdateWrapper.MspInstallAction.Do(IDictionary parameters)
at Microsoft.Crm.Setup.Common.Action.ExecuteAction(Action action, IDictionary parameters, Boolean undo)
--- End of inner exception stack trace ---
at Microsoft.Crm.UpdateWrapper.UpdateSetup.Install(IDictionary data)
at Microsoft.Crm.UpdateWrapper.UpdateSetup.Run()
14:44:09|Verbose| Update Rollup 3 (KB961768) Was Not Completed Successfully.
14:44:09| Info| Microsoft Dynamics CRM Server update was not completed successfully because of the following problems:
Action Microsoft.Crm.UpdateWrapper.MspInstallAction failed.
This patch package could not be opened. Verify that the patch package exists and that you can access it, or contact the application vendor to verify that this is a valid Windows Installer patch package.
14:44:13| Error| System.Configuration.Install.InstallException ---> System.Exception: Action Microsoft.Crm.UpdateWrapper.MspInstallAction failed. ---> Microsoft.WindowsInstaller.InstallerException: This patch package could not be opened. Verify that the patch package exists and that you can access it, or contact the application vendor to verify that this is a valid Windows Installer patch package.
at Microsoft.WindowsInstaller.Installer.ApplyPatch(String patchPackage, String installPackage, InstallType installType, String commandLine)
at Microsoft.WindowsInstaller.Installer.ApplyPatch(String patchPackage, String commandLine)
at Microsoft.Crm.UpdateWrapper.MspInstallAction.Do(IDictionary parameters)
at Microsoft.Crm.Setup.Common.Action.ExecuteAction(Action action, IDictionary parameters, Boolean undo)
--- End of inner exception stack trace ---
at Microsoft.Crm.UpdateWrapper.UpdateSetup.Install(IDictionary data)
at Microsoft.Crm.UpdateWrapper.UpdateSetup.Run()
--- End of inner exception stack trace ---
at Microsoft.Crm.UpdateWrapper.UpdateSetup.Run()
at Microsoft.Crm.UpdateWrapper.UpdateSetup.InternalMain(String[] args)
16:49:53| Info| === Managed setup logging started: 3/21/2009 4:49:53 PM ===
16:49:53|Verbose| Method entry: Microsoft.Crm.UpdateWrapper.UpdateSetup.Initialize
16:49:53|Verbose| Method entry: Microsoft.Crm.Setup.Common.SetupBase.Initialize
16:49:53|Verbose| Method exit: Microsoft.Crm.Setup.Common.SetupBase.Initialize
16:49:53|Verbose| Method exit: Microsoft.Crm.UpdateWrapper.UpdateSetup.Initialize
16:49:53|Verbose| Method entry: Microsoft.Crm.UpdateWrapper.UpdateSetup.Run
16:49:53|Warning| The specified /config file config.xml won't be used
16:49:53|Verbose| Method entry: Microsoft.Crm.Setup.Common.SetupBase.Run
16:49:53|Verbose| Method exit: Microsoft.Crm.Setup.Common.SetupBase.Run
16:49:53|Verbose| Method entry: Microsoft.Crm.UpdateWrapper.UpdateSetup.VerifyRequiredKBsAreInstalled
16:49:53|Verbose| Method exit: Microsoft.Crm.UpdateWrapper.UpdateSetup.VerifyRequiredKBsAreInstalled
16:49:53| Info| Window Left: 200
16:49:53| Info| Window Top: 200
16:50:00| Info| InstallInfo.AdminTargetFolder:
16:50:00| Info| InstallInfo.AllowRun: True
16:50:00| Info| InstallInfo.CleanupRequired: False
16:50:00| Info| InstallInfo.ConfigFile: config.xml
16:50:00| Info| InstallInfo.CreateDatabase: True
16:50:00| Info| InstallInfo.CurrentFolder: c:\57f38065efb148314dc2a0dfbe712fa4
16:50:00| Info| InstallInfo.InstallAlways: False
16:50:00| Info| InstallInfo.InstallingPackage: c:\57f38065efb148314dc2a0dfbe712fa4\Server_i386.msp
16:50:00| Info| InstallInfo.InstallType: Install
16:50:00| Info| InstallInfo.LocalPackage:
16:50:00| Info| InstallInfo.LogFile: C:\Documents and Settings\cirujales\Application Data\Microsoft\MSCRM\Logs\KB961768.log
16:50:00| Info| InstallInfo.PackageName: Server_i386.msp
16:50:00| Info| InstallInfo.RebootRequired: False
16:50:00| Info| InstallInfo.SharedInstall: False
16:50:00| Info| InstallInfo.SourceFolder: c:\57f38065efb148314dc2a0dfbe712fa4
16:50:00| Info| InstallInfo.SuppressReboot: False
16:50:00| Info| InstallInfo.TargetFolder: C:\WINDOWS\$CrmUninstallKB961768_Server$
16:50:00| Info| InstallInfo.UIMode: Full
16:50:00| Info| InstallInfo.UserCancel: False
16:50:00| Info| IpcInfo.NoLock: True
16:50:00| Info| ProductInfo.ExistingLanguage: 1033
16:50:00| Info| ProductInfo.ExistingProductCode: bc8dd950-8100-42f4-9ea9-26fcd41690af
16:50:00| Info| ProductInfo.ExistingVersion: 4.0.7333.3
16:50:00| Info| ProductInfo.InstallState: Local
16:50:00| Info| UpdateInstallInfo.Auto: False
16:50:00| Info| UpdateInstallInfo.Component: Server
16:50:00| Info| UpdateInstallInfo.ComponentInfo: Microsoft.Crm.UpdateWrapper.ServerInfo
16:50:00| Info| UpdateInstallInfo.DbHotfix: True
16:50:00| Info| UpdateInstallInfo.KBNumber: KB961768
16:50:00| Info| UpdateInstallInfo.LanguageID: 1033
16:50:00| Info| UpdateInstallInfo.PatchID: {3E804A41-B038-4FA7-94CC-C40CC3EAC5D4}
16:50:00| Info| UpdateInstallInfo.PublishReports: None
16:50:00| Info| UpdateInstallInfo.ReleaseType: Update Rollup 3
16:50:00| Info| UpdateInstallInfo.Revision: 1408
16:50:00|Verbose| Method entry: Microsoft.Crm.UpdateWrapper.UpdateSetup.Install| System.Collections.Hashtable
16:50:00|Verbose| Method entry: Microsoft.Crm.UpdateWrapper.HotfixMspInstaller.Install
16:50:13| Info| This patch package could not be opened. Verify that the patch package exists and that you can access it, or contact the application vendor to verify that this is a valid Windows Installer patch package.
E:\Server\i386\Server.msi
16:50:13| Info| InstallerException: 1635
16:50:13| Error| System.Exception: Action Microsoft.Crm.UpdateWrapper.MspInstallAction failed. ---> Microsoft.WindowsInstaller.InstallerException: This patch package could not be opened. Verify that the patch package exists and that you can access it, or contact the application vendor to verify that this is a valid Windows Installer patch package.
at Microsoft.WindowsInstaller.Installer.ApplyPatch(String patchPackage, String installPackage, InstallType installType, String commandLine)
at Microsoft.WindowsInstaller.Installer.ApplyPatch(String patchPackage, String commandLine)
at Microsoft.Crm.UpdateWrapper.MspInstallAction.Do(IDictionary parameters)
at Microsoft.Crm.Setup.Common.Action.ExecuteAction(Action action, IDictionary parameters, Boolean undo)
--- End of inner exception stack trace ---, Error, RetryCancel, Option1
16:50:18| Info| InputResult: Cancel
16:50:29| Info| InstallerException: Action Microsoft.Crm.UpdateWrapper.MspInstallAction failed.
16:50:29| Error| Configuration exception.System.Exception: Action Microsoft.Crm.UpdateWrapper.MspInstallAction failed. ---> Microsoft.WindowsInstaller.InstallerException: This patch package could not be opened. Verify that the patch package exists and that you can access it, or contact the application vendor to verify that this is a valid Windows Installer patch package.
at Microsoft.WindowsInstaller.Installer.ApplyPatch(String patchPackage, String installPackage, InstallType installType, String commandLine)
at Microsoft.WindowsInstaller.Installer.ApplyPatch(String patchPackage, String commandLine)
at Microsoft.Crm.UpdateWrapper.MspInstallAction.Do(IDictionary parameters)
at Microsoft.Crm.Setup.Common.Action.ExecuteAction(Action action, IDictionary parameters, Boolean undo)
--- End of inner exception stack trace ---
at Microsoft.Crm.UpdateWrapper.UpdateSetup.Install(IDictionary data)
at Microsoft.Crm.UpdateWrapper.UpdateSetup.Run()
16:50:29|Verbose| Update Rollup 3 (KB961768) Was Not Completed Successfully.
16:50:29| Info| Microsoft Dynamics CRM Server update was not completed successfully because of the following problems:
Action Microsoft.Crm.UpdateWrapper.MspInstallAction failed.
This patch package could not be opened. Verify that the patch package exists and that you can access it, or contact the application vendor to verify that this is a valid Windows Installer patch package.