Yeah, you can't put system apps on SD card. Check your phone storage settings to make sure that the apps download location is set to device, not SD card, and try again.
My sister's Lumia 920 is having EXACTLY THE SAME PROBLEM on 8.1 with Cyan. My 920 seems fine, but hers cannot be updated. I tried everything I could imagine, including changing a region. I'll probably have to do a hard reset.
My son has just got his first windows phone a 535 but after all the updating we are having the same problem. Cant update the games app. Please any help would be grateful