Jenius,
Many times you can "release" the file from the clenches of Windows by using Ctrl-Alt-Del and looking through the running processes and turing it off there. Once you have done that, you should be able to delete it.
I have seen this happen when the Catalog.LiveSubscribe file gets corrupted. Live Update will continue to say that you have the most current updates even though they aren't. Search for the Catalog.LiveSubscribe file on your system (make sure you are viewing all files) and rename it. Reinstall...
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