It won't install updates when a restart is pending.. so you will have to restart, then it will once again install the updates when it's scheduled (2am usually) or if you manually check for new updates.
Right, the machine had just been started, no pending restart except for the one after I ran WU manually.
Chronology:
Start machine
check for updates
accepted offers
download and install
posted screen shot
restarted.
Given that, there shouldn't have been an update in between. But who knows, maybe the auto snuck one in - doubtful though - the update history doesn't reflect that. I'm not concerned at this point - the thread was started to alert people about running Windows Update.
I just skimmed some of the MS lit and WU is the recommended 1st try solution if people are having issues with the 9926 install.
I think I saw it on the Insider hub app, but I've been reading a lot and testing too much.
+edit
Figured I'd check just in case. Only two updates in history.
The failed to install 'error' was in fact due to a restart req'd as I thought.
The wording should be changed to Restart Req'd so normal users don't get upset by a erroneous failed install msg - it didn't fail, it just hasn't completed.
Check history after the reboot that was needed, scheduled, and expected. Emphasis on expected.
There was no in between update or prior update that would fit the scenario Mystery described. So.... it's a mystery.
-edit