I had this problem recently on a customer site. It's an easy fix but I wanted to share to save others time.
Problem:
The CU for Windows Server 2016 July 2017 (KB4025339) failed to install on Windows Server 2016.
Resolution:
It's a pretty big update - over 1GB.
However the maximum run time of the update was incorrectly set to 10 minutes. Raising this to 60 minutes solves the problem.
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