Apple releases Mac OS X 10.5.6 Update with lots of bug fixes

I had the same problem, and called Apple support. They said they have been getting calls about it all day. The solution is as follows:

Turn off your computer (don't worry it is safe to do so).

Restart and log in.

Go to /Library/Updates/ and delete the Mac OSX Update folder.

Use the standalone installer to update your system. You can find it at http://support.apple.com/downloads/

Update went fine for me. I'd just give it some time.

If you really want, you could try reinstalling again by downloading the update, sticking it onto an external drive and then installing it in single user mode (installer -pkg /location/of/update.pkg -target /).

But i wouldn't recommend doing that unless you've got no other choice. Restarting while its updating can be a bad thing to do.