There's something odd going on here - please manually uninstall teh WAT update....
Close all open windows.
Open an Elevated Command Prompt window, and type the following command
wusa /uninstall /kb:971033
and hit the Enter key
Accept the warnings/confirmations, and wait for it to complete
copy and paste the output (if any) from the command prompt window to a reply here,
reinstall the update from http://support.microsoft.com/kb/971033
run another MGADiag report, and post it.