Hi Gary - well I finally have some good news! I had a copy of Heron's boot disk lying around so I thought I'd try booting into that env to delete the folder. Didn't work, but I decided to come at the issue a little sideways by creating a subdirectory and moving the offending/corrupted dir into it. That worked, so then I booted back into Windows, ran the update and it succeeded!
I can't say how grateful I am for your hard work and persistence with fixing this. Many thanks, and I'll be making a donation to the site as well.
Thanks again!