KB3177467 Servicing stack update for Windows 7 SP1 - Oct. 9

Brds7t7 said:

Does it keep reappearing in Windows update again after failing?

Try deleting the Windows Update cache. Firstly, stop then disable the Windows Update service following instructions in my earlier post. Be sure to disable it this time instead of setting to manual.

Then navigate to the folder:
C:\Windows\SoftwareDistribution\
And delete all the files inside the 'Download' folder (not the
actual folder itself though).

Reboot the PC and set the WU service back to 'Automatic (Delayed Start) and run WU again. See if that works?

Am I supposed to also delete the folders inside the WindowsDistribution folder?

The other problem is, when it gets to reportingevents.log it says the file is open in application experience and can't be deleted until I close the app. Same thing for the event cache folder.

skor said:

Am I supposed to also delete the folders inside the WindowsDistribution folder?

The other problem is, when it gets to reportingevents.log it says the file is open in application experience and can't be deleted until I close the app. Same thing for the event cache folder.

You shouldn't be deleting other folders, only the contents of the Download folder.
Windows Update Issues – Clearing the Windows Update Cache – Azure Compute

I wouldn't advise deleting all the other folders, it could cause more issues.
You could also try Brink's tutorial to reset Windows update, as this can solve some update issues.

Windows Update - Reset

Be aware though, this will remove all entries in the Windows Update History. I personally don't really use it though, as I just check the "Installed Updates" link in Control Panel to see what is installed.

I'd also advise creating a system image/backup before doing any of these steps.