Windows 8.1 install error 0x80070002

Agafous's solution was spot on. It seems to be that in Windows 8.1 upgrades, it freaks out if you have your primary hard disk partitioned in such a way that your primary boot partition isn't necessarily your first partition on the disk - this is the case with large vendor desktop PC's from the likes of HP and Dell who tend to have 'recovery' partitions on the disk.

I ran into this same problem on my Dell E9900SF desktop PC but didn't have an issue whatsoever on my ASUS laptop. I found this page and the solution worked.

If you want to know how to make a partition active, here is a write-up on how to do it in Vista: http://windows.microsoft.com/en-au/windows-vista/mark-a-partition-as-active

Win 8 is very similar - go to Control Panel\All Control Panel Items\Administrative Tools and select "Computer Management" to find where you need to be, then follow the instructions from the link above from there. You'll be fine.

There's a folder C:\$Windows.~BT where the update is downloaded. Deleting this folder lets you start the download process again in the windows store.

Update 1: it lets you download the update again, but the installation still doesn't work.

Update 2: from the setuperr.log in C:\$Windows.~BT\Sources\Panther

SetupMgr: Error reading Store SQM registry data. Data = [StoreSetupDownloadPause], HRESULT = [0x80070002]    
SPGetCurrentOSGuid: BCD Open failed. Error: 0x00000002[gle=0x00000002]
Cannot get the current OS GUID. Error: 0x80070002[gle=0x00000002]
CSetupPlatform::ResurrectNewSystem: Failure: Win32Exception: 
\\?\C:\$Windows.~BT\Sources\newsystem.dat: The system cannot find the file specified. 
[0x00000002] __cdecl UnBCL::FileStream::FileStream(const class UnBCL::String *,enum UnBCL::FileMode,enum UnBCL::FileAccess,enum UnBCL::FileShare,unsigned long)[gle=0x00000002]