On a computer running Windows 7 and Windows Server 2008 R2, service pack 1 installation fails with error message 0x800f0826

You are unable to install Service Pack 1 on your computers running Windows Server 2008 R2 or Windows 7.  It fails with an error message as following, 

Installation was not successful.

An unknown error has occurred.

Error: 0x800f0826

The above errors occurs due to permission issues on usbstor.inf and usbstor.pnf files.

Set the proper permissions on usbstor.inf and usbstor.pnf

To do so, follow the steps listed below,

1. Start Windows Explorer, and then locate the %SystemRoot%\Inf folder

2. Right-click the Usbstor.inffile, and then click Properties

3. Click the Security tab

4. Under the Group or user names list, give full permission to SYSTEM and Administrators

5. Click Ok

Repeat step 1 - 5 for Usbstor.pnf file.

6. Reboot the computer once and then try installing Sp1

From the CBS log we see the following Errors

Line 2: 2011-05-09 10:34:21, Error                 CBS    SPI: (SPIRegQueryDWORDValue:400)Failed to open the registry root: n/a, key: SOFTWARE\Microsoft\Windows\CurrentVersion\Setup\ServicePack\SPReview. er=0x2
Line 4: 2011-05-09 10:34:21, Error                 CBS    SPI: (SPIRegQueryDWORDValue:413)Failed to query registry value: UploadDisableFlag er=0x2
Line 34: 2011-05-09 10:34:24, Info                  CBS    SPI: Reviewing Package_for_KB976932~31bf3856ad364e35~amd64~~6.1.1.17514.  State: -19 Error: 0x800f0826
Line 60: 2011-05-09 10:50:50, Error                 CBS    SPI: (SPIRegQueryStringValue:700)Failed to query registry value: MiscString2 er=0x2
Line 61: 2011-05-09 10:50:50, Error                 CBS    SPI: (CSystem::GetMachineName:395)Failed to query machine name from RAC hr=0x80070002
Line 124: 2011-05-09 11:37:41, Error                 CBS    SPI: (SPIRegQueryDWORDValue:413)Failed to query registry value: ComponentsRemoved er=0x2

Check the setupapi_dev.log, found the access denied error:

Published driver package. Time = 125 ms
     sto: {Publish Driver Package: exit(0x00000000)} <Time>
     sto: {Publish Driver Package: <File Path> usbstor.inf} <Time>
     sto:      Publishing driver package:
     sto:           Driver Store   = <File Path> (Online | 6.1.7600)
     sto:           Driver Package = <File Path> usbstor.inf
     sto:           Flags          = 0x00000000
!!!  idb:      Failed to update active driver store entry, Error = 0x00000005
!!!  idb:      Failed to publish 'usbstor.inf', Error = 0x00000005
!!!  idb:      Error 5: Access is denied.
!!!  sto:      Failed to publish '<File Path> usbstor.inf'. Error = 0x00000005
!!!  sto:      Failed to publish driver package. Time = 31 ms, Error = 0x00000005
     sto: {Publish Driver Package: exit(0x00000005)} <Time>
!!!  sto: Failed to publish all driver updates. Error = 0x00000005
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