Why does wusa fail with "The System cannot find the file specified"?

On Windows 7 or later, attempting to use wusa.exe to install a CAB file containing a Windows update returns error 0x80070002 (-2147024894), "The System cannot find the file specified".

I've tried quoting the full path to the file, running the command in session zero, and everything else I could think of. Why won't the update install?

As documented in Description of the Windows Update Standalone Installer in Windows, wusa.exe is designed for installing updates in the form of .msu files. It cannot install updates that are in .cab files.

To install an update in a CAB file, use dism.exe instead, e.g.,:

dism /Online /Add-Package:B77A6E83F39EA6B1F3AF261B8B8861B382E37B40.cab

DISM is documented in What Is Deployment Image Servicing and Management?