FULL PRODUCT VERSION :
$ java -version
java version "1.6.0_65"

But the Java control panel under System Preferences says "Your current version is Java 8 Update 121. It is recommended that you update now to get the latest security fixes."

ADDITIONAL OS VERSION INFORMATION :
Darwin saturne.local 13.4.0 Darwin Kernel Version 13.4.0: Mon Jan 11 18:17:34 PST 2016; root:xnu-2422.115.15~1/RELEASE_X86_64 x86_64

EXTRA RELEVANT SYSTEM CONFIGURATION :
OSX comes with java 6. I manually installed Java 8. I installed the last update, Java 8 121 because already then the update failed.

A DESCRIPTION OF THE PROBLEM :
SInce I installed Java 8 the automatic java update fails.

A popup says "A new version of Java is available!". I have 121 build 13, the latest is 131 build 11.
I choose "Install Update".

A popup says "Updating Java, Downloading update..." with a progress bar and a text "XX MB of 67.0 MB".

When the progress bar reaches 67 MB, it waits there for maybe 30 seconds.

Then a new popup says "Update Error!" An error occurred while donwloading the update. Please try again later." The only option is to cancel the update.

And it does this every time since I installed Java 8 JDK manually. I somehow expect the new version will fix the update process but it repeatedly doesn't.


REGRESSION. Last worked in version 6u45

ADDITIONAL REGRESSION INFORMATION:
$ java -version
java version "1.6.0_65"
Java(TM) SE Runtime Environment (build 1.6.0_65-b14-462-11M4609)
Java HotSpot(TM) 64-Bit Server VM (build 20.65-b04-462, mixed mode)

But the Java control panel under System Preferences says "Your current version is Java 8 Update 121. It is recommended that you update now to get the latest security fixes."

STEPS TO FOLLOW TO REPRODUCE THE PROBLEM :
I suppose that if you take a Mac and install manually Java 8 over the OS's Java 6, it will behave like that. I have seen another person reporting this on StackOverflow after installing the jre (I installed the jdk).

EXPECTED VERSUS ACTUAL BEHAVIOR :
EXPECTED -
The update should complete. The control panel should show the new version.
ACTUAL -
The update does not complete. The control panel still complains that I should update urgently.

ERROR MESSAGES/STACK TRACES THAT OCCUR :
"Update Error!"

An error occurred while downloading the update.
Please try again later.

[Cancel Update]

REPRODUCIBILITY :
This bug can be reproduced always.

CUSTOMER SUBMITTED WORKAROUND :
Download the whoel jdk manually from Oracle every time an update is relesed.