Check that you haven't moved or renamed the iLife applications from their default locations. For instance, iMovie should be in /Applications/ an not in a sub-folder.
If I'm reading the distribution correctly, that particular error message should only show up if:
1. iMovie is earlier than v9.0.0
2. The iMovie 9.0.4 Update can't locate the application.
If the iMovie 9.0.4 Update MUST be installed from the AppStore, then a different error message is used:
"The version of iMovie installed on this Mac must be updated through the Mac App Store. Check the Mac App Store to see if an update is available."
However, if the iMovie Application has been moved, the installer can't see the AppStore receipt (it's inside the application) so your installed version may in fact need to be updated via the AppStore, but if it's been moved.... get the idea?