I had this problem, triggered by running out of disk space. Deleting
the apps that downloaded but didn't install helped those, but didn't
fix the NPE when you try to cancel the stuck downloads.

I managed to google up a solution. Go into Settings / Applications /
All Applications / Market and clear the Market application's data. Not
the Market Downloader, the actual Market application.

You won't be losing anything important -- it still knows what's
downloaded and what's not.  I think that's probably all owned by the
package manager. But it forgets about the downloads in progress and
lets the market function again.

On Nov 5, 1:22 pm, Eric F <[email protected]> wrote:
> I've found that when this happens, going into the application in
> Market and just hitting install actually successfully updates the app
> even though the button said install and the app was already installed.
>
> Market has been really problematic of late. Recently also it has
> become stuck in the download state for an application and trying to
> cancel it causes Market to FC on a NPE. I reported the bug on
> b.android.com yet it has not even been looked at.
>
> -Eric
>
> On Nov 5, 12:35 pm, Kostya Vasilyev <[email protected]> wrote:
>
>
>
>
>
>
>
> > Some more information on this old topic:
>
> > Sometimes Market fails up install application updates. The download is
> > successful, but the actual installation fails. There is probably
> > something in the logcat, but it doesn't help users.
>
> > I just had this happen to me on my development phone (I use one to
> > develop, and update another phone from a different account to verify the
> > update).
>
> > After this failure, Market lists the application as not installed,
> > although the existing version (if there was one) actually stays installed.
>
> > I was able to resolve the issue by uninstalling the application via
> > Settings -> Applications, then re-installing through Market.
>
> > Hope this is useful.
>
> > --
> > Kostya Vasilyev -- WiFi Manager + pretty widget 
> > --http://kmansoft.wordpress.com

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