How long did you give the system to rebuild the database prior to the failed SP1 update? Not sure why it can't find some file, Ad-aware might be involved, but did you have any situations with the original Windows 7 install?
What did the System Readiness Tool say?
Did you download the SP1 update from here:
Microsoft Update Catalog
Do you normally run the system with Automatic updates enabled?
Did the system ever Rollback? The following link show some of the log files that might contain info on why the install is failing. You may or may not have some of the logs, and some may be hidden, like the $Windows ones.
Windows 7, Windows Server 2008 R2, and Windows Vista setup log file locations