The Digital Sig. for Windows Installer v.126.96.36.199 (KB942288-v3) is May 22, 2008. Four years later and a signifigant number of XP still have the previous version 3.1 (KB/893803) Wouldn't suggest this was a*fix* for current issue but certainly upgrading may solve other past or future update installation.
The hinky loop appears to be due to detection logic for re-release deployment of another security update.
For some the solution was simply to manually invoke Windows Update (Run>wupdmgr). and select a Custom Scan.