This may happen, if you renamed the folder "wsusoffline" to something else. The script UpdateOU.new says in line 90-91:
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echo Updating WSUS Offline Update...
%SystemRoot%\System32\xcopy.exe ..\wsusoffline .. /S /Q /Y
So, there is a new folder "wsusoffline", and the enclosing folder is also supposed to be "wsusoffline". Using absolute paths, this could translate to:
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%SystemRoot%\System32\xcopy.exe C:\wsusoffline\wsusoffline C:\wsusoffline /S /Q /Y
Then the inner folder and all files and subdirectories will be recursively copied to the outer folder, replacing files and folders of the same name. But if the outer folder is renamed, for example to wsusoffline96, this would translates to:
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%SystemRoot%\System32\xcopy.exe C:\wsusoffline96\wsusoffline C:\wsusoffline96 /S /Q /Y
and then the inner folder will simply be copied to itself. If some files are busy, this could also explain the "access denied" errors.