This also happens to me.  Click on the "Install  Updates" button and the 
application waits.  The first package is not greyed... the rest are.  The 
cursor is the circular 'wait' one.  No popup for password as expected.  The app 
cannot be closed (I haven't tried kill...fearful of really screwing up).  Only 
way out is to reboot.  Running Lucid on AMD64.  I think it usually works after 
a reboot.
.xsession-errors is HUGE, possibly because I've got a number of KDE apps 
running in gnome (another, long, story) but if there is a keyword to look for, 
I'll scan through and post relevant lines.

-- 
Update manager hangs after clicking on the install updates button
https://bugs.launchpad.net/bugs/498492
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