I noticed SQL updates (KB960089 but also SQL SP3) were failing to apply on the WSS Developer VM.
After many hours of frustration, I located this great blog post that helped me to overcome the issue:
In my case, the missing .msi's were from SQL Developer edition. The missing .msp's were from SQL SP2 & KB948109.
Here's the download location for SQL KB948109:
Windows SharePoint Services 3.0 SP1 Developer Evaluation VPC Image