Duh! UAC akka user access control is supposed to prevent users/applications from making unintended changes to the system! Sometimes this feature could result in producing frustrating issues, like interfering with microsoft office 2003/2007 updates.
If you are facing the same crisis with Office updates, before trying anything else, disable the UAC (You need administrator privileges to turn it off) and give it a try. Disabling UAC requires a reboot. Hope this information is useful for few frustrated souls out there.

Windows7bugs team, Kuwait