Office 2007 use the Updates folder from the installation media to install any new updates that it finds in the folder, however the updates need to be in the .msp file format for them to be recognized. Since the Office 2007 SP2 update file is delivered in the .exe format, an extra step is required before being able to proceed:
We have to slipstream the update file into the Updates folder.
First, you should copy the contents of the Office 2007 CD/DVD to a temporary folder. For our example I’ll use D:\Office2007. I have also copied (office2007sp2-kb953195-fullfile-en-us.exe) to the root of the D:\ drive.
Then, using the Run command in Windows XP/Vista (WinKey+R), or in command prompt run the following command:
D:\office2007sp2-kb953195-fullfile-en-us.exe /extract:D:\Office2007\Updates\
replacing D:\ with wherever you stored the Office 2007 SP2 update file and D:\Office2007\ with wherever you stored the Office 2007 files.
After agreeing to the Microsoft Software License Terms, SP2 will be extracted to D:\Office2007\Updates\.
That’s it! Just start the setup for Office 2007 and the updates for SP2 will then be picked up and installed during the setup. The same method applies to any other Office 2007 SP2 update.
You may also now burn the files to the DVD so you have SP2 integrated in your installation.