If you run into issues with the Zune 3.0 download (like I did this morning), you may want to try to download the complete install package.
The error I was getting was “Can’t contact Microsoft Update. Please try again later.”, but the following should work with all of the issues listed at: http://support.microsoft.com/kb/944938?sd=zune
The normal Zune setup path is a two step process, 1) download the bootstrapper and then that 2) downloads the install package. For the workaround you go right to the complete install package which is hosted here: http://go.microsoft.com/fwlink/?LinkID=104738
The complete steps for the direct install are here:http://support.microsoft.com/kb/944938?sd=zune. I’ve copied them below:
To obtain all required updates in one package, follow these steps:
1. Verify that you have administrative rights to install software.
2. Make sure that you have sufficient free space to install the Zune software. For more information about system requirements for Zune, visit the following Web site:
3. Click the following link to download the update package:
4. In the dialog box that appears, click Run to start the installation process.
5. When you are prompted, type the name of the folder where the files will be extracted.
6. When the files are copied to the folder, open the folder, and then double-click Startzune.exe to install the Zune software.