you may as well, nothing to lose. If you have done all other updates there will not be that much to install
This happened to me too. I worked with a M$ rep to get the SP1 to install. I tried all the normal techniques with no effect (clean, direct install, change user, admin...). I was also able to install everything else as well. I got some non helpful error that was not in the M$ system. To fix it I downloaded the SP1 pack (I have 64bit so used that version) it was just under 1Gig. I then ran the Windows 7 Disc "In Place Upgrade". Do not search the internet for updates, just need the basic 'upgrade' install. Then run the Sp1 installer that was downloaded. Reboot, then run Windows update, all good. This does NOT re-install Windows but simply replaces the basic system files. The only additional things I needed to do after was Re-Install Drivers, (Video, Sound, RAID).