I had the exact same problem, and this is how I solved it:
I tried the hints in
'Windows Update error 80070643' (http://tinyurl.com/y9zypwv
and started the service 'Office Source Engine', which was set to manual
in my case. After trying to install KB982311 again, it still failed.
I don't think this helped at all, but maybe the 'O.S.E.' service needs
to run for the next actions to work.
I googled KB982311 and I downloaded the update from
'Download details: Security Update for Microsoft Office 2003 (KB982311)'
This is an exe, which can be opened with winzip, and contains 4 files:
ohotfix.exe, ohotfix.ini ohotfixr.dll and MSO.msp.
I extracted them to a temporary folder and executed MSO.msp. I could
just double-click it, but if it is not associated with any program you
should open it with c:\windows\system32\msiexec.exe.
Then the update installed just fine.
At the end it asked to restart the computer which i was too lazy (and
impatient) to do at that time.
To check if it had really succeeded I ran windows update again, and then
it wanted to install 5 office related updates:
KB982311 (Yes still there, perhaps I should have restarted, but now it
The last one failed with error 0x80246002.....
But after a restart it also installed without any problem.
So in the end, everything is installed, no more nagging messages!
Thanks Microsoft, for this user-friendly experience, and the non-help in
the given solution.
Posted at http://microsofthelpforums.com