Apparently turning off steam, restarting your PC, and restarting steam/download help/solve the issue.

It worked, thanks!

that did'nt work for me ;)

I'm stuck at 98% with this message "an error has occured while updating ..... (connection timed out)".

http://steamcommunity.com/discussions/forum/1/684839199691597031/

I'm reposting this here since It's only with this game that I have this problem maybe someone has the same bug has me.

Hi guys!
I was having steam installation errors a while back.
Here is what worked for me in dl'ing the game in steam.
Was at 98% and it just kept pausing.

Stopped the dl'ing.
I copied the download file in C:\Steam\steamapps
went into the downloading folder
cut and pasted the 209000 folder and all the patches into another temporary folder named crappy workdeRp. During pasting there will be an error saying that a texture file or what not cannot be transferred, just choose skip and continue with the process.
Then went back to steam app, right clicked on Batman:AO, chose delete local content
restarted the dl.
Then looked at the downloading folder in C:\Steam\steamapps, to check if the 209000 folder and all the patches were installing again.
Paused the dl'ing in steam app for Batman: AO, then copy - pasted the 209000 folder and all the patches in temporary folder named crappy workdeRp into the downloading folder in C:\Steam\steamapps.
Continue dl'ing the game in steam app.
After the installation was done, I right clicked Batman:AO in steam chose
properties --> local files --> verify integrity of game cache.
It will find errors and will prompt to download some Batman:AO files.
Then played Batman:AO.

The game for me can only run in 1600 x 900 resolution.
Wished they would have a patch so I can play at 1920 x 1080.

:-)

what the ♥♥♥♥ is going on, I brought this ♥♥♥♥ and I want to play it now, after 98% this ♥♥♥♥ is downloading again back to 0%, it took me 2 days to have this ♥♥♥♥ at 98% I want a solution now steam, you are ♥♥♥♥♥♥♥ kidding me