I've been having this issue for a while. When it tries to update to 1607 it will restart, work on updates, then it will tell me it failed to update and roll back. The entire process takes 30-40 minutes and is annoying because you can't stop it, and the way updates work you are pretty much forced to update. This has happened with several updates, all labeled 1607 but having different KB numbers. The latest one which has failed is KB3200970. My current solution is to use the Microsoft "Show or Hide Updates" troubleshooter which allows you to hide these updates, which works until a new 1607 update gets released. I believe I've narrowed it down to PC's which previously were in the Insider program. I have about a dozen PC's between work and home and the ones which never were in the Insider program all update with no issues. The 2 which don't update are my home desktop and my surface pro 4, both of which were previously in the Insider edition but when the anniversary update came out were reverted to regular release editions. I've done a lot of research and there are tons of solutions, none of which work. I have not attempted a full reset as it would be very time consuming and difficult to start from scratch and reinstall and I just don't have the time or energy. But I'm concerned about missing security updates and such which may be in these updates so really need to find a solution.