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It's likely an issue with either an Anti-virus program or something similar, perhaps even Steam itself.
Exit Steam, restart the comp, restart Steam. Do a "Verify Local File Cache." Make sure your AV software is configured to allow the permissions needed for Steam to access the install directory. And, for that matter, where is your Steam install and where are you installing/updated Bannerlord?
You've signed up for the Early Acess program for Bannerlord. You should expect full reinstalls, here and there, and broken plathroughs as a simple matter of actually participating in the E.A. program.
Done the restart (both app and pc), done verify. Checked anti-virus. The current update for example is at 12/12mb but still with the error. Had it also been an anti-virus issue, this would affect other games, which it doesn't.
This is not something to do with the EA status of the game. This is a specific Steam related issue. And one that has only been mentioned by 4-5 people on this forum so far - likewise it only existed since 1.0.4.
I believe it has something to do with how Windows 10 locks down the Program Files (x86) folder.
I have noticed that game installers cannot delete or re-name files. When I try to delete the files myself, Windows puts them right back.
I have had to un-install games and open the folder in safe mode to delete the files in question.
Other times, I have had to simply re-start my PC.
If you don't have Windows 10, then I cannot speak of your issue.
I just know this happens to me quite often, and happened with this update as well.
I haven't tried resolving the Bannerlord problem just yet. I can hardly wait.
EDIT: I restarted my PC and the update went through.
My only fix has been to reinstall, but a 60GB+ download everyday is tiring.
Did you re-start your PC?
That is what resolved it for me.