You will have to delete the following folder on your computer:
C:\Documents and Settings\All Users\Application Data\Concordia Publishing House\Lutheran Service Builder 2\Patches
or on Vista:
C:\ProgramData\Concordia Publishing House\Lutheran Service Builder 2\Patches
Once you have done so, you should be able to run the Updater without issue. We are tracking this problem and will likely issue a patch to the Updater at some point soon to solve it.
The folders listed above are "hidden" on a default installation of Windows. You may have to enable viewing hidden folders in order to see them. To learn how, press F1 while on the Desktop to open Windows Help and search for "hidden folders". You should be able to find an article regarding showing hidden files and folders.