Thanks for the help. Let me say that I've never purchased the iLife apps and the computer was a brand new mac mini and there were updates in the Mac App store.
For some reason the computer would not download the 10.7.1 update (wouldn't show up in software update) and that was required before it would let me update the 3 ilife apps. I called Apple Support via phone and they had me correct permissions, verify the disk, reinstall Lion and that fixed it. I was able to downlaod the 10.7.1 update and then update the three ilife apps from the Mac App Store.