EDIT OF 6/19/2012:
New Instructions:
The FIX-IT’s for this KB have been released today for this Security update. They are available for download at : 
http://support.microsoft.com/kb/2686509 

Fixits do not appear to work with this particular update failure.  Please continue to use the manual instructions below.




For those people posting to the http://answers.microsoft.com/thread/0deeacb6-115c-419d-ac37-03ff8927b79c  thread who upgraded from Windows ME or 98 to XP, this action left behind leftovers of keyboard mappings that are Windows ME or 98 related.  As a result the patch will fail.  I've typed up this visual how-to to make it a bit easier. Please note this is only one of three different errors types I've seen so if this doesn't fit your exact failure type, I will be attempting to document all three I've seen people report.

If you remapped a keyboard key, review this post.  If you can't find the dll's mentioned in the faultykeyboard.log file, review this post.

You have a Windows XP that was once a Windows ME or Windows 98.  You go to install KB2686509 it fails with 0x8007F0F4 error.




Or you may see a message like this:




You DO have a log file anywhere on your PC called faultykeyboard.log file.  This should be in the c:\windows folder. 
The contents of the log file looks like this:


And the details of the log file are (or are similar with the .kbd file extension)
kbdsp.kbd
kbdsp.kbd
kbdno.kbd
kbdla.kbd
kbdla.kbd
kbdla.kbd
kbdla.kbd
kbdla.kbd
kbdus.kbd
kbdla.kbd
kbdus.kbd
kbdla.kbd
kbdla.kbd
kbdla.kbd
kbdla.kbd
kbdla.kbd
kbdla.kbd
kbdla.kbd
kbdla.kbd
kbdla.kbd
kbdla.kbd
kbdla.kbd
kbdla.kbd
kbdycl.kbd

If this is your symptoms, see if following this will get KB2686509 installed.

Step one, go to your Windows XP and click on the start button, then on run


Then in the run box type in regedit.

Now drill down the listing you see there and find a specific registry key.

HKEY_LOCAL_MACHINE\SYSTEM\CurrentControlSet\Control\Keyboard Layouts

Go to HKEY_LOCAL_MACHINE.  Under there find System and click on the "+" to expand the location.  Now find a key called CurrentControlSet and expand that by clicking the "+" .  Now scroll down and find the registry key Control and again click on the "+".  Now find the key called Keyboard Layouts.
Right mouse click and export this file to a place on your computer like My documents.


Save this key in a place where you can find it again, like My documents


Now that you've exported this value, open up the file in notepad.
Right mouse click the file, and click on open with notepad.  Click on Edit, then on Find Next (or hit f3) and put in one at a time, the listing of the kbd files found in your faultykeyboard registry file.



Delete the entire entry that contains this kbd file in this registry file and delete them. Notice that some are there multiple times, and you have to delete each instance.

Go back to HKEY_LOCAL_MACHINE\SYSTEM\CurrentControlSet\Control\Keyboard Layouts

And save the original keyboard layouts file with a different name.  You can, for example, add a 1 to the registry file name so you have a backup.  Now delete everything under the keyboard layouts key.  Now save the edited regsitry file of Keyboard Layouts (the original file name) into to the registry.  You can click on the file and it will reimport it into the registry replacing the kbd files in the registry.  (Please note that you may see this under Keyboard Layout (singular) - as well).

Now reboot your Windows XP.
Now attempt to install KB2686509 again either via manual download going to http://www.microsoft.com/en-us/download/details.aspx?id=29804 and downloading from there or using Windows update again.  It now should complete successfully.





If these instructions do not work for a Windows ME or Windows 98 upgraded to a Windows XP, please post back on the http://answers.microsoft.com/thread/0deeacb6-115c-419d-ac37-03ff8927b79c thread with your exact problem.