While trying to update my Android SDK I am encountering this error when trying to install this particular package:
well i had the same issue on windows 7 ... problem is that during the update it tries to rename the tools folder (inside the SDK folder) and that folder is used by a process "ADB" which is currently running ...
so you cannot do the update smoothly until you stop / kill that process ...
BTW copy pasting the new contents of tools folder from the temp would also work ...