Figured it out. I found in the update logs the path it was trying to download that file from on the WSUS server and when I went to that path in a browser, the file was refusing to download. I first verified that the file was actually on the server and not corrupt (both checked out). I then noticed that WIM files were kind of obscure in all of the content folders. Only because I have web development and server experience did it hit me that maybe the MIME type for WIM files was not registered in IIS. Sure enough that was the issue. Just needed to add WIM as a MIME type and then restarted the windows update service and it installed.
I found the following two articles advising on this subject:
Regards,
Matt