I was experiencing the same issue: Windows Update was stuck in "Preparing to Install..." When I tried to stop the install it said I needed Administrator Permissions. The account I was using was a Domain Administrator account and it appeared in the Administrators group on the local machine. I tired shutting down and cold booting, but when I went to Windows Update, it still said "Preparing to Install..."
I went to Control Panel -> Administrative Tools -> Services and scrolled down to the bottom to find the "Windows Update" service and stop it. I then started it again and when I went back to Windows Update, it showed the available current updates - not "Preparing to Install...". I deselected all the updates and selected just the first two. They installed successfully (reboot required).
After the reboot, I chose two more. They installed successfully (no reboot required). Then I chose 9 more. They also installed successfully (reboot required). The reboot took a very long time. I was looking at "Configuring Windows updates" for about five minutes.
After rebooting, I selected the remaining current updates, including an Optional driver update. They installed successfully as well (reboot required).