Looking at the report in WSUS for this server I see the following entry for this patch:
Security Update for Microsoft .NET Framework 4 on Windows XP, Windows Server 2003, Windows Vista, Windows 7, Windows Server 2008, Windows Server 2008 R2 for x64-based Systems (KB2416472)
I believe the Not Applicable is the problem - it might have to do with that line saying nothing about SP1. However MS10-070 states that the patch is applicable also for Windows Server 2008 R2 for x64-based Systems Service Pack 1
I've checked the windowsupdate.log file on the machine and there are no references to KB2416472.
Update 1: WSUS version 3.2.7600.226
Update 2: Patch installs manually without problems.