Run update from console session! - MS07-049: Vulnerability in Virtual PC and Virtual Server that could allow privilege elevation
If you prefer to run Microsoft Updates from a TS session, then make sure you run MS07-049 from a console session per the KB 937986 (http://support.microsoft.com/kb/937986).
Taken from the KB:
When the update 937986 is applied on a remote machine by using Terminal Services, the update does not replace the vulnerable files if the /console option is not used. To avoid this issue, you must use the /console option as shown in this example:
mstsc /console /v:<machine name>