"This update increases the reliability of Smart Tags in Microsoft Office 2003 by additionally restricting the way that Web sites are associated with the Smart Tag actions."
http://support.microsoft.com/?kbid=885828

I wonder if such updates should be accepted without looking at what they do. Smart Tags are something I disable from the get go. They sounded like a security issue ready for exploit.

More about your issue. You didn't reveal what version of Office you had. Some OEM version fail in that manner and cleanup is fun. I have to dive into the registry and run the Microsoft Installer Cleanup utility from http://support.microsoft.com/default.aspx?scid=290301

Try the cleanup tool.

In closing, if you have Office addons, these updates can cause Office to fail when the addins are present.

best of luck,

Bob