When I searched about this error there were a lot of articles describing how to reset Windows Update and potentially solve this issue. Most of those pertained to Windows 10.
For Windows Server 2016, I found a quick and easy solution. Download and install the update by using sconfig instead. Apparently sconfig uses a different process for installing updates than the graphical interface.
First, open a PowerShell prompt or command prompt as Administrator:
Select Option 6 to download and install updates. This opens another window:
Select whether you want to list all updates or just recommended updates. And then select which updates you want to install. After installation, you'll be prompted to restart just like the standard update process.