Error updating from vm2.0 to vm2.06

[alokem]

I get an error trying to update from vm2.0 to vm2.06. I am using Joomla 2.5.1.
I am trying to update using manual method of uploading and installing package from local drive.

Here's the error:

JFolder::create: Infinite loop detected
Warning: Failed to move file!

Thanks for any help in advance.