where should *.MSU updates from microsoft for vista reside so that it get automatically installed during the setup procedure of any version of windows Vista.

i ma rebuilding my vista source using vista AIK.

what will be the folder structure.

heard that there is a folder named updates, and all the updates should go inside that folder. but where is that folder? or just in the CD root or inside install.wim or inside boot.wim

Look here

VISTA32 hotfix-TOOL

heard that there is a folder named updates, and all the updates should go inside that folder. but where is that folder? or just in the CD root or inside install.wim or inside boot.wim

Thats supposedly going to happen with SP1 for Vista where you can place the updates in a Updates folder

Still better to integrate them cause its less size and time on the Install