I don't know why it isn't working on your system but the flash updates are working on both my systems, XP Pro and win7 32bit.
Now for an update of flash to work, it really is no different to how it would work if you updates it manually, in that for it to work you have to close the browser/s that the update is for. The update of the activeX version of flash you have to close IE, for the plugin based version you have to close other browsers such as firefox before it will work.