That update should not be causing a problem.
It is probably a permissions problem.
I am describing below from memory as I am at work and don't have my mac in front of me, so everything may not be exactly as I describe.
Open up Disk Utility from the Utilities folder inside of Applications and choose the harddrive. Choose to repair permissions on the repair tab. Let it run ~45 minutes. Reboot and try to install the update again.
To properly fix permissions on the boot disk you actually need to boot with the OSX install disk (from CDROM, attach USB cdrom w/disk inside, hold down the C key during boot until you hear the chime). Pay very close attention because you do not want to reinstall. At each screen check if the menu bar (across the top of the screen) is active, go into Utilities, I think, and choose Disk Utility from there. Repair permissions from there.
Good luck.
