Greetings and Salutations
The 12.1.1 update does require the 12.1.0 update to be installed. This update is what we call an incremental update; therefore, prior updates are required.
As others have noted, if you make certain changes to Office (strip PPC or Intel part of universal binary; remove language files) the updater will not find Office. You will want to reinstall Office (or use a Time Machine version) to put those files back.
mwp98223 (post 38 or so) gave a link to a blog post that has the items I talked about from previous installs. That blog discusses the issues that will prevent the updater from finding/updating office, and how you can rectify them.
While reinstalling (the last step) will resolve the issue, it only masks the symptoms and you might find yourself in the same boat again. If you have tried the other steps and they don't apply to you, please post to this forum.
I am reading the forum and sending private emails to those who cannot install to work through issues to find out what is happening and get them up and running.
Please remember, there are changes to the "requirements" on where/how the Office application can live now - many of the "requirements" for Office updating and installing (don't move, don't rename, don't change files) are the same sort of updating/installing "requirements" that are on Adobe and Apple applications. So, while I do feel for those folks who hit installation issues due to these issues; there is not much i can do for them.
So far we have not found issues that are not outside of these, but I want to make sure of that; thus my working with folks that cannot install. To these folks (who either don't realize they have "broken the rules" or perhaps we find something else), I truly apologize you are having this agony. Hopefully, you'll take me up on this offer to help with install issues and we'll get you up and going.
Thanks for your time
David Pelton
Microsoft MacBU