24" iMac won't install any 'large' Apple software updates from the internet

Question

I am having a serious issue with my iMac and neither the people on the phone at Apple Care or the 'Geniuses' at the Genius Bar have been able to assist. So, maybe someone here can:
First - here is the background information about what happened and what I've done:
A few weeks ago when the new iTunes 10 came out I went to upgrade. The upgrade failed it said. So, I thought perhaps Apple was having issues with the new software or something. So, I thought - Ok, I'll give it a day or two.
I come back and try again from Apple.com - no luck. Hmmmm - well, I just happened to see my 'software update' icon pop up and there was iTunes. I thought "Great! Now I'm sure it'll install!" No luck.
So, I think - well, perhaps I've done something to corrupt my profile. So, I create a new profile and try again. No dice.
So now I'm really confused and figure - ok, let me try a partition and I'll try again. Still nothing.
Finally I figure - ok, something is wrong here. So, since nothing is working I backup my music and important files and wipe out the hard drive and start over. No luck. And, in fact - since I had gone back to 10.5.4 or whatever - software updates needed to install to get me back to 10.5.5. Those wouldn't install through software updates OR when downloaded from Apple.com - Smaller downloads like, flash, java, firefox, etc - all download and install without issue.
I decided to engage "Apple Care" and they call me at the time I specified and we begin to do some tests on the hardware and everything came back ok. We tried from Apple.com and software updates again - still won't install the software. Keeps coming back with "Software installation failed" something about the package installer was corrupted during downloading.
The guy at Apple care thinks perhaps its my network corrupting something. This begins to make a little sense and I think, maybe he's right. My wireless router isn't that great so, maybe I'll just go replace it. However, while I'm checking out I begin to think that maybe its NOT my wireless router - because I do have 2 other computers in my house who haven't had issues downloading anything. So, this is unlikely. But, I didn't like the wireless router anyway - so I went ahead with the purchase.
I get it home - set it up and try again. STILL not working. So, I make an Appointment at the "Genius Bar". I take it in - show them the screen shots of the errors and we get started. They try to do the install of either iTunes or the combo update on THEIR network - still won't work. The genius thinks I have a bad HD and takes the computer for 2 days to look at it.
I finally get to go pick it up - excited that I'll have my iMac (which I use for work) back and functioning again. I go pick it up and they decided that it wasn't my hard drive - but likely my RAM. They couldn't prove it was the RAM but figured since I bought the RAM after I bought the iMac that this must be the issue (even though it was up to exact Apple standards and was from Crucial). So, I think - well, while I have a blank slate I'll go ahead and install Snow Leopard. So, I pick up Snow Leopard and get new RAM too and go home to install.
I get the computer home, put the new RAM in, install snow leopard and get ready to work! After snow leopard install is done - it has some new updates it needs to install. And the update FAILS to install again. Oh, and they never replaced the HD.
So, I call Apple Care again - they have no clue. They suggest making an Apple Genius Bar appointment. So, I take it in again. They run diagnostics on it from their 'Triage' external hard drive and everything checks out. He says its probably the hard drive (same conclusion they came to the first time) and said that they would replace it.
I get the computer back - take it home. Everything is up to date. All the software updates were back in place including iTunes 10. However, I still want to test and see if I can download iTunes and/or do updates. So, I uninstall iTunes and download it again. Same problem. STILL won't install any large software downloads. But, again - Smaller downloads like, flash, java, firefox, etc - all download and install without issue. Just no core Apple updates or things like iTunes will download and install on my iMac.
I then took it to a friends house - set it up on his network - same issue.
So to sum up:
I have re-imaged the hard drive several times
I have replaced the ram
I have replaced my networking hardware (even though other machines on the network have no issues)
I have taken it in twice to the Genius Bar and they still haven't fixed it
The Problem followed the machine and exhibited the same issues in store as it did in my home (so we know the problems stays with the machine)
I have tried it on yet a 3rd network and the issue still exists
The people at the Genius Bar told me that If I still have issues then its with my network - even though its been proven it wasn't.
Its only larger downloads like Combo Updates and iTunes that won't install.
Any ideas? Sorry for the long post but its been quite an ordeal.

Answer 1

Yes, I have tried the updates directly from the Apple website and a different issue occurs. When I do that I get various different errors - the most common saying 'Codec overrun'. This has happened both before and after complete software OS reinstalls (Completely wiping the HD clean).
I did a video of my issue on my iPhone. I had to cut it and compress it to get it off my phone without syncing (because I can't sync it since I can't get iTunes installed now). So, its about a minute long if anyone wants to see it:
http://www.youtube.com/watch?v=8leWwEoIeXI
And yes, we tried to repair permissions a couple times but didn't seem to have any effect on whether it would install these updates. Again, it's NOT all software downloads/installs. It seems to be limited to LARGER pieces of software. Example: Firefox, Flash, Java and Silverlight have all downloaded and installed without error on my iMac. Apple combo updates and iTunes won't install at all.