Problems with Windows Update

Just for the record, here's the apparent failure from the CBSPersist file.

Code:

2014-01-04 03:28:47, Info                  CBS    Exec: Resolving Package: Package_1_for_KB2834140~31bf3856ad364e35~amd64~~6.1.2.0, Update: 2834140-1_neutral_LDR
2014-01-04 03:28:47, Info                  CBS    Exec: Resolving Package: Package_1_for_KB2834140~31bf3856ad364e35~amd64~~6.1.2.0, Update: 2834140-1_neutral_LDR, PinDeployment: amd64_625642d59cbd9b78ffba236f626be496_31bf3856ad364e35_7.1.7601.22313_none_43c43e854bf640c0
2014-01-04 03:28:47, Error                 CSI    00000a96 (F) STATUS_OBJECT_NAME_NOT_FOUND #79776530# from Windows::Rtl::SystemImplementation::DirectFileSystemProvider::SysCreateFile(flags = 0, handle = {provider=NULL, handle=0}, da = (FILE_GENERIC_READ), oa = @0xeae8e0->OBJECT_ATTRIBUTES {s:48; rd:NULL; on:[93]"\??\C:\Windows\Servicing\Packages\Package_1_for_KB2834140~31bf3856ad364e35~amd64~~6.1.2.0.cat"; a:(OBJ_CASE_INSENSITIVE)}, iosb = @0xeae960, as = (null), fa = (FILE_ATTRIBUTE_NORMAL), sa = (FILE_SHARE_READ|FILE_SHARE_WRITE|FILE_SHARE_DELETE), cd = FILE_OPEN, co = (FILE_NON_DIRECTORY_FILE|FILE_SYNCHRONOUS_IO_NONALERT|0x00004000), eab = NULL, eal = 0, disp = Invalid)
[gle=0xd0000034]
2014-01-04 03:28:47, Error                 CSI    00000a97@2014/1/4:11:28:47.693 (F) d:\win7sp1_gdr\base\wcp\sil\merged\ntu\ntsystem.cpp(2057): Error STATUS_OBJECT_NAME_NOT_FOUND originated in function Windows::Rtl::SystemImplementation::DirectFileSystemProvider::SysCreateFile expression: (null)
[gle=0x80004005]
2014-01-04 03:29:04, Error                 CSI    00000a98 (F) STATUS_OBJECT_NAME_NOT_FOUND #79776529# from Windows::Rtl::SystemImplementation::CSystemIsolationLayer_IRtlSystemIsolationLayerTearoff::TransferFile(flags = (OpenForBackupIntent), op = [4]"Copy", odir = NULL, oname = [l:186{93}]"\??\C:\Windows\Servicing\Packages\Package_1_for_KB2834140~31bf3856ad364e35~amd64~~6.1.2.0.cat", ndir = @0x5def7b38, nname = [ml:126{63},l:80{40}]"da8d69224009cf01b14100001019c018_catalog", disp = Unmapped disposition: 0)
[gle=0xd0000034]
2014-01-04 03:29:04, Error                 CSI    00000a99 (F) HRESULT_FROM_WIN32(ERROR_FILE_NOT_FOUND) #79776390# from Windows::COM::CComponentStore::InternalTransact(...)[gle=0x80070002]
2014-01-04 03:29:04, Error                 CSI    00000a9a (F) HRESULT_FROM_WIN32(ERROR_FILE_NOT_FOUND) #79776389# from Windows::ServicingAPI::CCSITransaction::AddCatalog(Flags = 0, CatalogPath = [93]"\\?\C:\Windows\Servicing\Packages\Package_1_for_KB2834140~31bf3856ad364e35~amd64~~6.1.2.0.cat")[gle=0x80070002]
2014-01-04 03:29:04, Error                 CSI    00000a9b (F) HRESULT_FROM_WIN32(ERROR_FILE_NOT_FOUND) #79776388# from Windows::ServicingAPI::CCSITransaction::ICSITransaction_PinDeployment(Flags = 0, a = 625642d59cbd9b78ffba236f626be496, Version = 7.1.7601.22313, pA = PROCESSOR_ARCHITECTURE_AMD64 (9), Culture neutral, VersionScope = 1 nonSxS, PublicKeyToken = {l:8 b:31bf3856ad364e35}, Type neutral, TypeName neutral, PublicKey neutral, cb = (null), s = (null), rid = [77]"Package_1_for_KB2834140~31bf3856ad364e35~amd64~~6.1.2.0.2834140-1_neutral_LDR", rah = [1]"3", manpath = [158]"\\?\C:\Windows\TEMP\1956DC54-CC68-4520-8814-E0C66FB5A3B5\amd64_625642d59cbd9b78ffba236f626be496_31bf3856ad364e35_7.1.7601.22313_none_43c43e854bf640c0.manifest", catpath = [93]"\\?\C:\Windows\Servicing\Packages\Package_1_for_KB2834140~31bf3856ad364e35~amd64~~6.1.2.0.cat", ed = 0, disp = 0)[gle=0x80070002]
2014-01-04 03:29:04, Error                 CBS    Exec: Missing manifest for Package: Package_1_for_KB2834140~31bf3856ad364e35~amd64~~6.1.2.0, Update: 2834140-1_neutral_LDR, file: \\?\C:\Windows\TEMP\1956DC54-CC68-4520-8814-E0C66FB5A3B5\amd64_625642d59cbd9b78ffba236f626be496_31bf3856ad364e35_7.1.7601.22313_none_43c43e854bf640c0.manifest. [HRESULT = 0x800f081f - CBS_E_SOURCE_MISSING]
2014-01-04 03:29:04, Info                  CBS    Failed to pin deployment while resolving Update: 2834140-1_neutral_LDR from file: \\?\C:\Windows\TEMP\1956DC54-CC68-4520-8814-E0C66FB5A3B5\amd64_625642d59cbd9b78ffba236f626be496_31bf3856ad364e35_7.1.7601.22313_none_43c43e854bf640c0.manifest [HRESULT = 0x800f081f - CBS_E_SOURCE_MISSING]
2014-01-04 03:29:04, Info                  CBS    Failed to resolve item[0] in Package: Package_1_for_KB2834140~31bf3856ad364e35~amd64~~6.1.2.0, Update: 2834140-1_neutral_LDR [HRESULT = 0x800f081f - CBS_E_SOURCE_MISSING]
2014-01-04 03:29:04, Info                  CBS    Failed to resolve execution update. [HRESULT = 0x800f081f - CBS_E_SOURCE_MISSING]
2014-01-04 03:29:04, Error                 CBS    Failed to resolve execution package: Package_1_for_KB2834140~31bf3856ad364e35~amd64~~6.1.2.0 [HRESULT = 0x800f081f - CBS_E_SOURCE_MISSING]
2014-01-04 03:29:04, Info                  CSI    00000a9c@2014/1/4:11:29:04.788 CSI Transaction @0x28174490 destroyed
2014-01-04 03:29:04, Info                  CBS    Perf: Resolve chain complete.
2014-01-04 03:29:04, Info                  CBS    Failed to resolve execution chain. [HRESULT = 0x800f081f - CBS_E_SOURCE_MISSING]
2014-01-04 03:29:04, Error                 CBS    Failed to process single phase execution. [HRESULT = 0x800f081f - CBS_E_SOURCE_MISSING]
2014-01-04 03:29:04, Info                  CBS    WER: Generating failure report for package: Package_for_KB2834140~31bf3856ad364e35~amd64~~6.1.2.0, status: 0x800f081f, failure source: Resolve, start state: Installed, target state: Installed, client id: DISM Package Manager Provider
2014-01-04 03:29:04, Info                  CBS    Failed to query DisableWerReporting flag.  Assuming not set... [HRESULT = 0x80070002 - ERROR_FILE_NOT_FOUND]

I couldn't see any signs that you'd done a CheckSUR scan?

Generally if the shutdown fails to do so, then look at the hard drive activity light (if there is one) and check for any activity there - if there's none at all for at least a minute, then I reckon it's safe to switch off. If there's a repetitive pattern to the blinking, but mostly it's off, then it's a little risky, but usually ends up OK - but I follow it immediately with another shutdown/restart to embed anything that may not have processed fully.

Then things get more risky with the amount of disk activity :)

Good luck with the new install!

.... Optional Updates -
I always hide Bing :)
I'd install the Windows updates - they are probably compatibility updates, which may ease installation and running of older programs.
Drivers - up to you, but may be worth having if you have any problems with the ones already installed. Check your manufacturer's website first, though - they may have more recent ones than WU does.
If by 'AV updates' you mean MSE ones, then MSE has its own installation routine for updates, and the one in WU is really just to let you know - I install them anyhow.
Silverlight - debatable whether you have any need for it, as it's not a very popular programming tool, and MS has basically canned it, as I understand it. Don't install it unless you have a need for it.

There's really no benefit to installing programs onto another drive - and if the 'other drive' is actually a partition on the same disk drive as Windows then there are very good reasons not to as it increases the wear on the drive head, and slows things down.
If your Windows drive goes belly-up you have to reinstall both anyhow.
I just keep the Windows drive big enough to hold Windows and the programs, and move data off into another partition/drive.