I ran into this problem with 3 Virtual Machines. All of them were brand new installations, so it was not an issue with badly behaving applications.
The cause appeared to be the way Gen2 virtual machines worked with a particular recent update. Gen 1 virtual machines did not present this issue.
Thanks to Susan Bradley and GurliGebis on the technet forums here (http://social.technet.microsoft.com/Forums/windowsserver/en-US/e58c8b30-b91a-4d90-a1b5-8859ffc3b92c/kb2920189-fails-to-install-on-generation-2-vms?forum=winserverhyperv), we have a workaround.
- Shutdown the Virtual Machine.
In the VM settings, disable Secure Boot.
- Start the VM and install the updates.
- Shutdown the VM and re-enable Secure Boot again.
- Start up the VM.