I agree that there is not enough information to determine the cause of the block; however, I ran your information through some analysis code that was posted by WayneS, which I use all the time (thanks WayneS), and it looks like you are doing a Update and Select which both have a lock mode of U. According to books online:

U Mode is used on resources that can be updated. Prevents a common form of deadlock that occurs when multiple sessions are reading, locking, and potentially updating resources later.

That said, it does not appear to be the locking mode causing the deadlock. My next plan of attack would be to look at the query plan. It is possible that the update statement is using a table scan which might be locking the entire table. Again, more info is needed. I am posting the analysis code below for you to use.

declare @deadlock xml

set @deadlock = 'put your deadlock graph here'

select

[PagelockObject] = @deadlock.value('/deadlock-list[1]/deadlock[1]/resource-list[1]/pagelock[1]/@objectname', 'varchar(200)'),

[DeadlockObject] = @deadlock.value('/deadlock-list[1]/deadlock[1]/resource-list[1]/objectlock[1]/@objectname', 'varchar(200)'),

[Victim] = case when Deadlock.Process.value('@id', 'varchar(50)') = @deadlock.value('/deadlock-list[1]/deadlock[1]/@victim', 'varchar(50)') then 1 else 0 end,

[Procedure] = Deadlock.Process.value('executionStack[1]/frame[1]/@procname[1]', 'varchar(200)'),

[LockMode] = Deadlock.Process.value('@lockMode', 'char(1)'),

[Code] = Deadlock.Process.value('executionStack[1]/frame[1]', 'varchar(1000)'),

[ClientApp] = Deadlock.Process.value('@clientapp', 'varchar(100)'),

[HostName] = Deadlock.Process.value('@hostname', 'varchar(20)'),

[LoginName] = Deadlock.Process.value('@loginname', 'varchar(20)'),

[TransactionTime] = Deadlock.Process.value('@lasttranstarted', 'datetime'),

[InputBuffer] = Deadlock.Process.value('inputbuf[1]', 'varchar(1000)')

from @deadlock.nodes('/deadlock-list/deadlock/process-list/process') as Deadlock(Process)