Creating a MSI log as explained in
http://support.microsoft.com/kb/2223300 will show:
Action 13:09:18: DetectServiceAccount.
Action start 13:09:18: DetectServiceAccount.
MSI (c) (B0:30) [13:09:18:285]: Transforming table CustomAction.
MSI (c) (B0:30) [13:09:18:285]: Transforming table CustomAction.
MSI (c) (B0:30) [13:09:18:285]: Note: 1: 2262 2: CustomAction 3: -2147287038
MSI (c) (B0:30) [13:09:18:285]: Transforming table Binary.
MSI (c) (B0:30) [13:09:18:285]: Transforming table Binary.
MSI (c) (B0:30) [13:09:18:285]: Note: 1: 2262 2: Binary 3: -2147287038
MSI (c) (B0:30) [13:09:18:332]: Creating MSIHANDLE (7) of type 790542 for thread 1328
MSI (c) (B0:CC) [13:09:18:332]: Invoking remote custom action. DLL: C:\Users\V23656~1.LDD\AppData\Local\Temp\2\MSI16AB.tmp, Entrypoint: DetectServiceAccount
MSI (c) (B0:CC) [13:09:18:426]: Closing MSIHANDLE (7) of type 790542 for thread 1328
Action ended 13:09:18: DetectServiceAccount. Return value 3.
MSI (c) (B0:30) [13:09:18:442]: Doing action: SetupCompleteError
Action 13:09:18: SetupCompleteError.
This will happen if you configured the account used to start the Forefront Identity Manager Synchronization Service using the UPN (Universal Prinzipal Name, i.e. name@company.com). Change the service account using the domain\user syntax and run the Update 2 Installation again.