It's definitely not an issue with Ultimate, or we would encounter this error constantly, so we can rule that out. Don't worry about the hotfix, that corrects a very specifc eccentricity within XP.
Your SSD isn't split into multiple partitions, is it?
Inside of GFWL, try changing your download directory (it is the first option under the settings tab) to your storage drive instead of your SSD. Then close GFWL, click on start, search for command and open your command prompt. Then type bitsadmin /reset in the command prompt and hit enter. Try to start the download again. If you can, try to simplify the network connection by direct connecting to your modem with an ethernet cable. What happens?
If you still have issues, take a look at your list of installed programs. Do you have all of following--GFWL (client and redistributable), Microsoft .net framework 4.0, Microsoft Silverlight, and the Windows Live ID sign in assistant?
Please reply with your results and any new info that emerges. You can also contact us at 877-274-4349.