Question : KB973544

I'm having no end of problems attempting to apply this update to a Windows 2003 R2 Standard x86 server.

No registry or file permissions are evident.

The installation dialogue disappears when the 'Gathering Information...' form is presented to screen and there is no record of a successful installation when checking C:\Windows\WinSxS.

Has anybody observed any similar problems?

Answer : KB973544

KB973544 is only applicable to machines that have the Microsoft Visual C++ 2005 Service Pack 1 redistributable installed.  Have you installed this on systems?
However you can download the latest version of Microsoft Visual C++ 2005 Service Pack 1

Download Link :
http://www.microsoft.com/downloads/details.aspx?familyid=766a6af7-ec73-40ff-b072-9112bab119c2