I had problems with updating my system to 1607 version.
Recieved error message File not found.
Found this website with solution
We were having an issue with the Windows 10 upgrade MS recently released to WSUS server on our domain. To put a long story short the issue is in IIS and NOT WSUS per say. After some testing it turns out IIS was not serving the .esd file (this is the main update file) due to the mime type not being set. To rectify the issue:
under IIS Admin->WSUS Administration->Content-> Click on “Mime Types”-> Add
File Mame Extention: = .esd
MIME type: application/vnd.ms-cab-compressed
If you have already tried to pull the W10 update you may need to clear your SoftwareDistribution Download Cache under the Windows Dir and clear out the hidden $WINDOWS.~BT
The actual mime type for esd, accordion to http://www.filesuffix.com/en/extension/esd, is “application/octet-stream”.