Just for your Information. We are at work using a winpe Version 10 for Installation of Windows 7. I was not involved in this Project (joined the Company at a later Point). But the Version is working in sccm and we are using it on a daily Basis to avoid Driver Problems on our devices.
My colleagues ran some test and said, that they had least issues by using winpe 10. So it is possible to use it with win7.
For installing updates remember that a few updates are dependant on other updates. I've experienced issues with the inclusion of updates if certain patches were not included.
if you get at a Point in the Installation where it Fails, use ctrl+f10 to open a cmd prompt and look into the panther Directory and search for a setuperr.log or setupact.log (i think it was called like that). It should tell you which part of the Installation is failing.