KB3176938 fails ... count me in on the issue.

Hi,

The update service on the computer might be facing a corruption. You may try resetting it to start the new update process. I suggest you to reset the Update components on the system.

Refer the link below for the steps to manually reset the Update components and check if it helps.

How do I reset Windows Update components?

http://support.microsoft.com/kb/971058/en-us(Applies to Windows 10)

Registry disclaimer

Note: This section, method, or task contains steps that tell you how to modify the registry. However, serious problems might occur if you modify the registry incorrectly. Therefore, make sure that you follow these steps carefully. For added protection, back up the registry before you modify it. Then, you can restore the registry if a problem occurs. For more information about how to back up and restore the registry, click the following article number to view the article in the Microsoft Knowledge Base: 322756 (http://support.microsoft.com/kb/322756/ )

Hope this information is helpful. Please do let us know if you need further assistance, we’ll be glad to assist you.

Thanks for the help. No luck. Some of the DLL's in the KB you pointed to were not there or had bad entry points when I registered them.

I my quick looking it seems to me maybe one of the hidden partitions (EFI System or Recovery) maybe be full or something and it is reporting back as read only.  Just a guess on my part.

There is also this event in and around the time of the update.

"Task Scheduler service found a misconfiguration in the NT TASK\Microsoft OneDrive Auto Update Task-S-1-5-21-327551999-1293475099-919374006-1005 definition. Additional Data: Error Value: %localappdata%\Microsoft\OneDrive\OneDrive.exe."

and

"Task Scheduler service found a misconfiguration in the NT TASK\Microsoft\Windows\Workplace Join\Automatic-Workplace-Join definition. Additional Data: Error Value: %SystemRoot%\System32\AutoWorkplace.exe."

It installs the update up to the 100% mark and then freaks out and undoes the install.

Some events of interest. in reverse order. All within a 8 minute stretch.

Installation Failure: Windows failed to install the following update with error 0x800F0922: Cumulative Update for Windows 10 Version 1607 for x64-based Systems (KB3176938).

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The following boot-start or system-start driver(s) did not load:
dam

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The description for Event ID 267 from source Win32k cannot be found. Either the component that raises this event is not installed on your local computer or the installation is corrupted. You can install or repair the component on the local computer.

If the event originated on another computer, the display information had to be saved with the event.

The following information was included with the event:

The specified resource type cannot be found in the image file

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The Update Orchestrator Service for Windows Update service terminated with the following error:
The media is write protected.