To solve this follow the work around:
Work Arround 1:
- Start Menu, click Run, type > control admintools and then click OK.
- Double-click Local Security Policy.
- Click Software Restriction Policies.
Note: If no software restrictions are listed, right-click Software Restriction Policies, and then click Create New Policy.
- Under Object Type, double-click Enforcement.
- Click All users except Local Administrators, and then click OK.
- Restart the computer.
Install SP1 with no errors.
Work Arround 2:
There is a fix from Microsoft to resolve the issue. Please visit the following knowledge base article:
Note: Revert the settings after the installation is over.