By simply changing this registry entry from a numeric '1' to a '0' (zer0), you are apparently telling the patch that the original installation was completed correctly:
Change the "Resume" value from a 1 to a 0.(If you have multiple instances of MSSQL installed, the MSSQL.1 reg key might be different for you)
Now you should be able to install the update either from Windows Update or manually using the knowledge base patch that has a full user interface. I used the full user interface patch and you may need to stop your instance of SQL Server before the patch can be fully applied - it will tell you if you need to. I did not use the "silent" Windows Update patch.
A big THANK YOU to whoever figured this out and to the person who posted the solution here today!