27" iMac stability issues, also stuck on 10.6.3, won't upgrade to 10.6.4

Question

Hi, we have a 27" iMac that is running 10.6.3 and is having stability issues. It's the Core i7 model, 8GB RAM, 1TB HDD - real nice machine. It was purchased this summer - but it's *not the absolute latest* model.
The issues revolve mostly around iPhoto '11 giving the spinning wait circle when trying to perform random operations including photo import, merging Events...simple things like that. It causes iPhoto to freeze and then Finder freezes, and so on. Have to turn the machine off with the power button. Yes, we ran Software Update and the latest iPhoto '11 update is installed.
In addition, I also tried to install the FaceTime Beta and it won't let me because it said it doesn't have Security Update 2010-005 installed. Downloaded that and it said it won't install because 10.6.4 isn't installed. Downloaded 10.6.4 and it refuses to install. Machine is stuck on 10.6.3. Software Update application says we all up to date and there are no "ignored" updates - the option to "Reset Ignored Updates" is even greyed out.
Tried repairing Disk permissions, rebooting...nothing.
I'm very disappointed because I recommended my Dad buy this machine to get him off PC's after touting how great, stable, and easy to use my Mac is and after dropping $2500 or whatever this thing cost, he is not impressed.
Please help, thanks.

Answer 1

First I would recommend doing SMC and PRAM resets. Here are the instructions:
_SMC RESET_
• Shut down the computer.
• Unplug the computer's power cord and all peripherals.
• Press and hold the power button for 5 seconds.
• Release the power button.
• Attach the computers power cable.
• Press the power button to turn on the computer.
_PRAM RESET_
• Shut down the computer.
• Locate the following keys on the keyboard: Command, Option, P, and R. You will need to hold these keys down simultaneously in step 4.
• Turn on the computer.
• Press and hold the Command-Option-P-R keys. You must press this key combination before the gray screen appears.
• Hold the keys down until the computer restarts and you hear the startup sound for the second time.
• Release the keys.
Next you should upgrade to 10.6.4. Here is the link to the 10.6.4 combo update. Navigate there and update the computer immediately. To me it appears you have a corrupt file if Software Update isn't finding any updates while you're on 10.6.3. You should be in touch with AppleCare and they can help you fix that.
http://support.apple.com/kb/DL1048
After doing the upgrade re-do the SMC and PRAM resets using the same instructions from above.
Finally repair disk permissions using Disk Utility (Applications-Utilities-Disk Utility)
If all that doesn't take care of it contact AppleCare while the machine is still covered by warranty. You get 90 days for free phone support, if you haven't already I would recommend purchasing AppleCare which will extend the warranty to 3 full years and includes 3 years of phone support. AppleCare must be purchased while the machine is still covered by it's original warranty. You can purchase AppleCare at a discount from resellers like Amazon and LA Computer Company. Just ensure you buy AppleCare for iMac.
If you don't want to get AppleCare then book an appointment at your local Apple Store and bring it in. I'm sure the problem is pretty minor.
Also a final thought, some people are in the habit of turning their computer off when their done. Apple recommends you leave it on 24/7 and let it sleep when not being used. If you are going to be away for more than a few days then turn it off. This is stated in the owner's manual.