1. Boot from a xp disk-->r for recovery console
2. Type this command: CHDIR $NtUninstallKB977165 $\spuninst
3. Type this command: BATCH spuninst.txt
4. Type this command: systemroot
5. exit
Next I downloaded a rootkit cleaner from Kapersky
This cleaned the offending malware and allowed me to re-install the MS update!