Java Update can only be run if the system is connected to the internet.
Instead, change preferences for how often you'd like to be notified of newer versions.
The default setting is to notify on a weekly basis.
Until the update is completed, this process will remind you that a newer secure version is available for your system.
You should leave this process running in order to ensure getting the latest secure Java version.
Here's how to manage automatic updating in Windows 7 (articles already exist on how to do this for Vista and XP).