This is usually a registry problem or the update installer cannot find the original .msi installation package, like it happens when launching the installer from a compressed archive (which extracts the files in a temp folder).
Possible solutions:
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Repair the installation from Programs and Features (quite likely, the installer will ask to provide the original .msi, please be sure to be able to locate it by having the DVD inserted or the ISO image mounted)
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Uninstall Cubase 8.5 from Programs and Features (the application only), re-install it using wither the DVD or the ISO image (to run just the Cubase .msi installer will do) and then run the update again