I wanted to post this after weeks and weeks of effort.
First, thanks to NoelDP & Susan for all their help...and Praveen at Microsoft.
Everyone worked tirelessly to help me out.
Unfortunately after weeks of MS remotely working on my machine and all the trials there was nothing that could be done. There was no clear indication of the issue but clearly something in the Ms Kernel of Windows 7 was mucked up. The only thing we could summize is that in October there was previous Kernel KB2724197 update I had issue installing and PC hung....I did HARD reboot. After coming up I WAS able to install but I cannot uninstall on this problem PC...even though I can on other similar Windows 7 PCs. Since KB2799494 is a similar type Kernel update (same files affected) we could only assume that the other did install but was corrupted....not allow new updatyes. So, at the end of all this a In-Place Upgrade (Repair) was needed. This took ~3 hours but did not trash any of my installed programs or data. I did have to re-install all updates since SP1 but small price to have PC working again.
Here is the link to get the O/S ISO: Windows 7 Direct Download Links
Here is good how-to link on how to do a repair install: How to Repair a Corrupt Windows 7 Installation | PCWorld
Thx again to all !!!!!...hope this post helps everyone else but my case probably was so niche that perhaps others really aren't seeing.