Trouble installing iTunes 10.7 onto PC

On my PC at home, I'm currently running on Windows XP. The iTunes software I have is one maybe even two updates out of date. My iPhone 4 has the latest iOS 6.0 software installed as I have been updating it's software without the use of a computer.
Now when I plug my iPhone 4 into my PC I get the message "The iPhone cannot be used because it requires iTunes version 10.6.3 or later. Go to www.itunes.com to download the latest version of iTunes."
If I press start > Apple software update (the way I usually update iTunes) I get the message "SoftwareUpdate.exe - Entry Point Not Found: The procedure entry point ?CreateProductsFromXML@CSUCatalogObject@@QAEXP6AIPAXIIJ@Z0IV?$CStringT@_WV?$StrT raitMFC@_WV?$ChTraitsCRT@_W@ATL@@@@@ATL@@@Z could not be located in the dynamic link library SoftwareUpdateFiles.dll.
If I go to www.itunes.com as suggested in the second paragraph. When I try to download iTunes 10.7, I'm asked if I want to overwrite the software etc (which all has the same names as the previous version. If I do this will all my music and stuff be lost? I'm quite nervous about doing this as most the majority of things in my iTunes library are not brought from iTunes and I haven't backed up my iPhone in about six weeks and there's a lot of important things currently on my iPhone which I cannot afford to lose.

It looks like you've got two different problems going on at once.
If I press start > Apple software update (the way I usually update iTunes) I get the message "SoftwareUpdate.exe - Entry Point Not Found: The procedure entry point ?CreateProductsFromXML@CSUCatalogObject@@QAEXP6AIPAXIIJ@Z0IV?$CStringT@_WV?$StrT raitMFC@_WV?$ChTraitsCRT@_W@ATL@@@@@ATL@@@Z could not be located in the dynamic link library SoftwareUpdateFiles.dll.
With that one I'd try repairing your Apple Software Update, as per the instructions from the following user tip:
"There is a problem with this Windows Installer package ..." error messages when installing iTunes for Windows
Now when I plug my iPhone 4 into my PC I get the message "The iPhone cannot be used because it requires iTunes version 10.6.3 or later. Go to www.itunes.com to download the latest version of iTunes."
Let's try a standalone Apple Mobile Device Support install. It still might not install, but fingers crossed any error messages will give us a better idea of the underlying cause of why it's not installing under normal conditions.
Download and save a copy of the iTunesSetup.exe (or iTunes64setup.exe) installer file to your hard drive:
http://www.apple.com/itunes/download/
Download and install the free trial version of WinRAR:
http://www.rarlab.com/
Right-click the iTunesSetup.exe (or iTunes64setup.exe), and select "Extract to iTunesSetup" (or "Extract to iTunes64Setup"). WinRAR will expand the contents of the file into a folder called "iTunesSetup" (or "iTunes64Setup").
Go into the folder and doubleclick the AppleMobileDeviceSupport.msi (or AppleMobileDeviceSupport64.msi) to do a standalone AMDS install.
(If it offers you the choice to remove or repair, choose "Remove", and if the uninstall goes through successfully, see if you can reinstall by doubleclicking the AppleMobileDeviceSupport.msi again.)
Does it install (or uninstall and then reinstall) properly for you? If so, can you get a normal iTunes install to go through properly now?
If instead you get an error message during the install (or uninstall), let us know what it says. (Precise text, please.)

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