The option "Install can request user input" has two fundamental impacts:
- It allows the WUAgent to present UI to a logged on user.
- It precludes the installation of that update in an unattended fashion -- which means that you cannot deploy such an update using Patch Manager Update Management or Update Management Wizard tools. The update MUST be initiated by a logged on user from the Control Panel Windows Update applet (or from the Notification Icon on a WinXP/2003 system).
It's entirely possible that the installation context of the package itself is changed in this instance, since the installation is now running interactively, not unattended/silent. However, this is exclusively a function of the behavior of the Windows Update Agent, and Patch Manager has absolutely nothing to do with this consideration.
The request for administrative credentials to run the package is likely a function of User Account Control configuration (on Vista and later). If your Vista/Win7 system does not permit non-admin users to install applications, then a UAC elevation prompt is something to be expected. On Windows XP systems, the logged on user would already have to have administrative privileges to launch the installation (either as result of group memberships, or the Allow non-administrators to receive update notifications policy setting).
Details regarding the use and behaviors of this option are discussed in the Update Agent Management Protocol documentation.