SP1 is very important and at present you don't have it. I suspect the reason its not been offered to you is that another pre-requisite update is repeatedly failing to install and hampering progress. Check the update history, and if I'm right note the K number of the failed update, then download and install it manually. Hopefully SP1 will then be offered, if its not, then also install it manually from Saab's link.
If it still won't install, post back. You need it. Your "I thought the SP included all updates to a certain point and if your machine was up to date then there was no need for the SP?" is very wrong