I use Microsoft Office 2007 Enterprise edition and recently saw this error in the System event log:
Installation Failure: Windows failed to install the following update with error 0x8007006e: Update for the 2007 Microsoft Office System (KB946691).
For more information, see Help and Support Center at http://go.microsoft.com/fwlink/events.asp.
Microsoft’s Support site says that the cause is due to “when the Windows Installer encounters a reference either to a drive that no longer exists or to a removable media device that contains no readable media.”
So to resolve it, you’ll need to download KB946691 and then install it.
Hope this helps.