I had this problem back in September after performing a fresh install of W7 on a Laptop a friend grave me that had come with W8.0
It was his daughters and she had made a huge mess of it.. it would not even boot, turned out the HD ( 900GB) was crammed full of downloads to the point the OS couldn't even open.
The restore utility could not run because of this. I had to pull the drive and format in another machine.
I tried to use the W8.0 licence with my 8.1 disk but 8.0 and 8.1 use different serials. So I grabbed my trusty W7 disk and managed a clean install. It's long in the tooth so it needs a tonne of updating.
It would just sit and go round and round for hours and then say it couldn't update because of server errors?
I went on a computer nerd forum ( NCIX) and everyone was ranting about how MS was putting a throttle on the W7 updates bandwidth to make life miserable for those turning there nose up at W10. True or not it sort of seemed this way. They all claimed, as above, that the only solution was to set it on automatic and leave it alone for a few days.. This is what worked for me in the end. I think it took 5 days.
I just recently inherited my mother in laws HP desktop. It is an impressive i7 quad core. sandybridge. 10 GB ram.. It came with W7 Home and a 1TB 7200 HD. The whole family has been messing with it for 4 years so I thought best to slap a SSD drive in it and re build.
I used my same old trusty W7 Ultimate disk again but this time the updated ran smoothly right away and within less than a day it was 100% good to go.
So possibly this is something at MS servers and there's a limitation on the bandwidth.
Now that everything is a download you can see this happening... And just think of the crazy bandwidth that W10 update is using alone.