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Go into the G4WL folder in Program Files (x86) on your C:\ drive and in the Client folder set both exe's to run as administrator.
Then exit the steam client and make sure you only have one version of GFWL installed.
If the older version is installed then uninstall it.
You have to be exited out of Steam to uninstall it.
Now with the latest version of GFWL ONLY installed Run Fable 3 from Steam again and sign in.
If it doesn't let you sign in then uncheck the box for remember password and put your password in and recheck the box and also check the box for sign in automatically.
Allow the client to run its silly update.
Exit GFWL when it tells you to.
The update should now run.
Relaunch Fable 3 from Steam.
Profit.