SP1 for Windows Vista won't install because it requires SP1

I would suggest following the steps in this document:

http://support.microsoft.com/kb/947366

I would especially take note of "Resolution 2: Run the System Update Readiness Tool".

That that does is check you system for prerequisites and problems in the your files and registry that would prevent the service pack from installing. It then, hopefully, fixes them. It takes at least 15 minutes to run, so it is working even if you start to wonder.

When I found this tool just last week, it finally fixed a problem installing SP1 on Vista that had me pulling at my hair. I hope it does the same for you.