I just installed jre-7u21 which comes direct from Oracle not from Apple. This Apple update refers to ver 6... AND won't install anyway. I'm confused.
Should I just ignore this update? Should I use the Apple udates in future? What's the difference"
For 10.6, you should use Apple's version. The current version from Apple is 1.6.0_51 from here, http://support.apple.com/kb/DL1572.
For 10.7, you can install the Oracle version. You will need to be running 10.7.3 or later and you will need to set the preferences to check for updates there, as they won't appear in Software Update.
You can find current info and useful answers here http://www.java.com/en/download/faq/java_mac.xml