I had a look at hostd.log and esxupdate.log.
Here is the last line from esxupdate.log:
INFO: states: Downloading VMware-esx-tools-3.5.0-184236.i386.rpm
And here is the last line from the 2009_09_29.request.log located in C:\Documents and Settings\All Users\Application Data\VMware\VMware Update Manager\Logs
127.0.0.1 - - "GET /vci/hostupdates/hostupdate/esx/esx-3.5.0/ESX350-200908404-BG/VMware-esx-vmkctl-3.5.0-184236.i386.rpm HTTP/1.1" 200 3219004 "-" "Python-urllib/2.0a1"
The strange thing is that these August patches installed properly on two other hosts in a different cluster about a month ago.
That's correct, VUM is on the same machine as Vcenter.