I didn't know if this was something I could help with or not by providing data. I was testing today with a standalone desktop (Dell Precision T1500 desktop, Core I7 with 10GB RAM). Fresh install of Windows 7 Professional 64 bit from retail media. No services packs. Created a USB directory in a folder named Target. Copied that folder to C:\ on the desktop (so the path is C:\Target). System just has one passworded account that is an admin that was setup during Windows setup (named WSUS), and that's the user account I'm using. I open C:\Target and launch UpdateIntaller.exe and select it to Auto recall and reboot. Let it start and it creates the account and automatically reboots. When it reboots it just sits on the Windows 7 sign in screen, offering my default admin account (WSUS) and the WOUtempadmin account. The WOUtempadmin is password protected with a password I don't know. So I login to WSUS instead. Immediately it asks if I want to run CleanupRecall.cmd, and I say Yes. The cmd prompt comes up again, shows the same text, and reboots again. Same thing, stops at signin screen, log in to WSUS, cmd pops up, tell it to run, ect. Only way to stop the loop is to cancel it running. I could then launch UpdateInstaller.exe again, select the same options without auto reboot, and it runs. It does not autoreboot, it asks me to do that. Then I have to start the process again for the next batch of updates. I have included the log file. If there's anything I can test or debug, please let me know. Thanks!
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Wed 06/01/2016 10:55:33.97 - Info: Starting WSUS Offline Update (v. 10.6.2)
Wed 06/01/2016 10:55:33.97 - Info: Used path "C:\Target\cmd\" on WSUS-PC (user: WSUS)
Wed 06/01/2016 10:55:33.97 - Info: Option /updatecpp detected
Wed 06/01/2016 10:55:33.98 - Info: Option /instmssl detected
Wed 06/01/2016 10:55:33.98 - Info: Option /instdotnet4 detected
Wed 06/01/2016 10:55:34.00 - Info: Option /instwmf detected
Wed 06/01/2016 10:55:34.00 - Info: Option /updatetsc detected
Wed 06/01/2016 10:55:34.01 - Info: Option /verify detected
Wed 06/01/2016 10:55:34.01 - Info: Option /autoreboot detected
Wed 06/01/2016 10:55:34.03 - Info: Option /showlog detected
Wed 06/01/2016 10:55:44.33 - Info: Found Microsoft Windows version 6.1.7600.16385 (w61 x64 enu sp0)
Wed 06/01/2016 10:55:44.33 - Info: Found Microsoft Windows Software Licensing Management Tool info...
Wed 06/01/2016 10:55:44.33 - Info: Name: Windows(R) 7, Professional edition
Wed 06/01/2016 10:55:44.33 - Info: Description: Windows Operating System - Windows(R) 7, RETAIL channel
Wed 06/01/2016 10:55:44.33 - Info: Partial Product Key: PW487
Wed 06/01/2016 10:55:44.33 - Info: License Status: Initial grace period
Wed 06/01/2016 10:55:44.33 - Info: Time remaining: 43200 minute(s) (30 day(s))
Wed 06/01/2016 10:55:44.34 - Info: Found total physical memory: 10 GB
Wed 06/01/2016 10:55:44.34 - Info: Found Windows Update Agent version 7.3.7600.16385
Wed 06/01/2016 10:55:44.34 - Info: Found Windows Installer version 5.0.7600.16385
Wed 06/01/2016 10:55:44.34 - Info: Found Windows Script Host version 5.8.7600.16385
Wed 06/01/2016 10:55:44.34 - Info: Found Internet Explorer version 8.0.7600.16385
Wed 06/01/2016 10:55:44.34 - Info: Found Microsoft Silverlight version 0.0.0.0
Wed 06/01/2016 10:55:44.34 - Info: Found Remote Desktop Client version 6.1.7600.16385
Wed 06/01/2016 10:55:44.34 - Info: Found Microsoft .NET Framework 3.5 version 3.5.30729.4926
Wed 06/01/2016 10:55:44.34 - Info: Found Windows PowerShell version 2.0
Wed 06/01/2016 10:55:44.34 - Info: Found Microsoft .NET Framework 4 version 0.0.0
Wed 06/01/2016 10:55:44.34 - Info: Found Windows Management Framework version 0.0.0.0
Wed 06/01/2016 10:55:44.34 - Info: Found Microsoft Security Essentials version 0.0.0.0
Wed 06/01/2016 10:55:44.34 - Info: Found Microsoft Security Essentials definitions version 0.0.0.0
Wed 06/01/2016 10:55:44.34 - Info: Found Network Inspection System definitions version 0.0.0.0
Wed 06/01/2016 10:55:44.34 - Info: Found Windows Defender definitions version 0.0.0.0
Wed 06/01/2016 10:55:44.34 - Info: Medium build date: 06/01/2016
Wed 06/01/2016 10:55:44.36 - Info: Medium supports Microsoft Windows (w61 x64 glb)
Wed 06/01/2016 10:55:44.40 - Info: Disabled screensaver
Wed 06/01/2016 10:55:44.50 - Info: Created temporary power scheme
Wed 06/01/2016 10:55:44.72 - Info: Adjusted power management settings
Wed 06/01/2016 10:55:44.75 - Info: Preparing installation of most recent Service Pack for Windows Vista / 7
Wed 06/01/2016 10:55:44.76 - Info: Saved Winlogon registry hive
Wed 06/01/2016 10:55:44.78 - Info: Suppressed Winlogon Legal Notice
Wed 06/01/2016 10:55:44.78 - Info: Saved System policies registry hive
Wed 06/01/2016 10:55:44.79 - Info: WSUS Offline Update was started from a local drive (C:)
Wed 06/01/2016 10:55:44.79 - Info: Prepared recall directory
Wed 06/01/2016 10:55:47.62 - Info: Created WOUTempAdmin account
Wed 06/01/2016 10:55:47.62 - Info: Registered recall
Wed 06/01/2016 10:55:44.76 - Info: Adjusted boot sequence for next reboot
Wed 06/01/2016 10:55:47.68 - Info: Ending WSUS Offline Update
--------------------------------------------------------------------------------
Wed 06/01/2016 10:58:32.42 - Info: Starting WSUS Offline Update (v. 10.6.2)
Wed 06/01/2016 10:58:32.42 - Info: Used path "C:\Target\cmd\" on WSUS-PC (user: WSUS)
Wed 06/01/2016 10:58:32.42 - Info: Option /verify detected
Wed 06/01/2016 10:58:32.42 - Info: Option /updatecpp detected
Wed 06/01/2016 10:58:32.44 - Info: Option /instmssl detected
Wed 06/01/2016 10:58:32.44 - Info: Option /instdotnet4 detected
Wed 06/01/2016 10:58:32.45 - Info: Option /instwmf detected
Wed 06/01/2016 10:58:32.45 - Info: Option /updatetsc detected
Wed 06/01/2016 10:58:32.47 - Info: Option /autoreboot detected
Wed 06/01/2016 10:58:32.48 - Info: Option /showlog detected
Wed 06/01/2016 10:58:37.19 - Info: Found Microsoft Windows version 6.1.7600.16385 (w61 x64 enu sp0)
Wed 06/01/2016 10:58:37.19 - Info: Found Microsoft Windows Software Licensing Management Tool info...
Wed 06/01/2016 10:58:37.19 - Info: Name: Windows(R) 7, Professional edition
Wed 06/01/2016 10:58:37.19 - Info: Description: Windows Operating System - Windows(R) 7, RETAIL channel
Wed 06/01/2016 10:58:37.19 - Info: Partial Product Key: PW487
Wed 06/01/2016 10:58:37.19 - Info: License Status: Initial grace period
Wed 06/01/2016 10:58:37.19 - Info: Time remaining: 43200 minute(s) (30 day(s))
Wed 06/01/2016 10:58:37.21 - Info: Found total physical memory: 10 GB
Wed 06/01/2016 10:58:37.21 - Info: Found Windows Update Agent version 7.3.7600.16385
Wed 06/01/2016 10:58:37.21 - Info: Found Windows Installer version 5.0.7600.16385
Wed 06/01/2016 10:58:37.21 - Info: Found Windows Script Host version 5.8.7600.16385
Wed 06/01/2016 10:58:37.21 - Info: Found Internet Explorer version 8.0.7600.16385
Wed 06/01/2016 10:58:37.21 - Info: Found Microsoft Silverlight version 0.0.0.0
Wed 06/01/2016 10:58:37.21 - Info: Found Remote Desktop Client version 6.1.7600.16385
Wed 06/01/2016 10:58:37.21 - Info: Found Microsoft .NET Framework 3.5 version 3.5.30729.4926
Wed 06/01/2016 10:58:37.21 - Info: Found Windows PowerShell version 2.0
Wed 06/01/2016 10:58:37.21 - Info: Found Microsoft .NET Framework 4 version 0.0.0
Wed 06/01/2016 10:58:37.21 - Info: Found Windows Management Framework version 0.0.0.0
Wed 06/01/2016 10:58:37.21 - Info: Found Microsoft Security Essentials version 0.0.0.0
Wed 06/01/2016 10:58:37.21 - Info: Found Microsoft Security Essentials definitions version 0.0.0.0
Wed 06/01/2016 10:58:37.21 - Info: Found Network Inspection System definitions version 0.0.0.0
Wed 06/01/2016 10:58:37.21 - Info: Found Windows Defender definitions version 0.0.0.0
Wed 06/01/2016 10:58:37.21 - Info: Medium build date: 06/01/2016
Wed 06/01/2016 10:58:37.21 - Info: Medium supports Microsoft Windows (w61 x64 glb)
Wed 06/01/2016 10:58:37.32 - Info: Disabled screensaver
Wed 06/01/2016 10:58:37.44 - Info: Preparing installation of most recent Service Pack for Windows Vista / 7
Wed 06/01/2016 10:58:37.47 - Info: Saved Winlogon registry hive
Wed 06/01/2016 10:58:37.49 - Info: Suppressed Winlogon Legal Notice
Wed 06/01/2016 10:58:37.49 - Info: Saved System policies registry hive
Wed 06/01/2016 10:58:37.57 - Info: WSUS Offline Update was started from a local drive (C:)
Wed 06/01/2016 10:58:37.57 - Info: Prepared recall directory
Wed 06/01/2016 10:58:37.68 - Warning: Creation of WOUTempAdmin account failed
Wed 06/01/2016 10:58:37.69 - Info: Registered recall
Wed 06/01/2016 10:58:37.46 - Info: Adjusted boot sequence for next reboot
Wed 06/01/2016 10:58:37.82 - Info: Ending WSUS Offline Update
--------------------------------------------------------------------------------
Wed 06/01/2016 11:02:46.78 - Info: Starting WSUS Offline Update (v. 10.6.2)
Wed 06/01/2016 11:02:46.78 - Info: Used path "C:\Target\cmd\" on WSUS-PC (user: WSUS)
Wed 06/01/2016 11:02:46.78 - Info: Option /verify detected
Wed 06/01/2016 11:02:46.80 - Info: Option /updatecpp detected
Wed 06/01/2016 11:02:46.80 - Info: Option /instmssl detected
Wed 06/01/2016 11:02:46.81 - Info: Option /instdotnet4 detected
Wed 06/01/2016 11:02:46.81 - Info: Option /instwmf detected
Wed 06/01/2016 11:02:46.83 - Info: Option /updatetsc detected
Wed 06/01/2016 11:02:46.83 - Info: Option /autoreboot detected
Wed 06/01/2016 11:02:46.85 - Info: Option /showlog detected
Wed 06/01/2016 11:02:49.06 - Info: Found Microsoft Windows version 6.1.7600.16385 (w61 x64 enu sp0)
Wed 06/01/2016 11:02:49.06 - Info: Found Microsoft Windows Software Licensing Management Tool info...
Wed 06/01/2016 11:02:49.06 - Info: Name: Windows(R) 7, Professional edition
Wed 06/01/2016 11:02:49.06 - Info: Description: Windows Operating System - Windows(R) 7, RETAIL channel
Wed 06/01/2016 11:02:49.06 - Info: Partial Product Key: PW487
Wed 06/01/2016 11:02:49.06 - Info: License Status: Initial grace period
Wed 06/01/2016 11:02:49.06 - Info: Time remaining: 43200 minute(s) (30 day(s))
Wed 06/01/2016 11:02:49.06 - Info: Found total physical memory: 10 GB
Wed 06/01/2016 11:02:49.06 - Info: Found Windows Update Agent version 7.3.7600.16385
Wed 06/01/2016 11:02:49.08 - Info: Found Windows Installer version 5.0.7600.16385
Wed 06/01/2016 11:02:49.08 - Info: Found Windows Script Host version 5.8.7600.16385
Wed 06/01/2016 11:02:49.08 - Info: Found Internet Explorer version 8.0.7600.16385
Wed 06/01/2016 11:02:49.08 - Info: Found Microsoft Silverlight version 0.0.0.0
Wed 06/01/2016 11:02:49.08 - Info: Found Remote Desktop Client version 6.1.7600.16385
Wed 06/01/2016 11:02:49.08 - Info: Found Microsoft .NET Framework 3.5 version 3.5.30729.4926
Wed 06/01/2016 11:02:49.08 - Info: Found Windows PowerShell version 2.0
Wed 06/01/2016 11:02:49.08 - Info: Found Microsoft .NET Framework 4 version 0.0.0
Wed 06/01/2016 11:02:49.08 - Info: Found Windows Management Framework version 0.0.0.0
Wed 06/01/2016 11:02:49.08 - Info: Found Microsoft Security Essentials version 0.0.0.0
Wed 06/01/2016 11:02:49.08 - Info: Found Microsoft Security Essentials definitions version 0.0.0.0
Wed 06/01/2016 11:02:49.08 - Info: Found Network Inspection System definitions version 0.0.0.0
Wed 06/01/2016 11:02:49.08 - Info: Found Windows Defender definitions version 0.0.0.0
Wed 06/01/2016 11:02:49.08 - Info: Medium build date: 06/01/2016
Wed 06/01/2016 11:02:49.08 - Info: Medium supports Microsoft Windows (w61 x64 glb)
Wed 06/01/2016 11:02:49.15 - Info: Disabled screensaver
Wed 06/01/2016 11:02:49.29 - Info: Preparing installation of most recent Service Pack for Windows Vista / 7
Wed 06/01/2016 11:02:49.31 - Info: Saved Winlogon registry hive
Wed 06/01/2016 11:02:49.33 - Info: Suppressed Winlogon Legal Notice
Wed 06/01/2016 11:02:49.33 - Info: Saved System policies registry hive
Wed 06/01/2016 11:02:49.40 - Info: WSUS Offline Update was started from a local drive (C:)
Wed 06/01/2016 11:02:49.40 - Info: Prepared recall directory
Wed 06/01/2016 11:02:49.51 - Warning: Creation of WOUTempAdmin account failed
Wed 06/01/2016 11:02:49.51 - Info: Registered recall
Wed 06/01/2016 11:02:49.29 - Info: Adjusted boot sequence for next reboot
Wed 06/01/2016 11:02:49.65 - Info: Ending WSUS Offline Update