I have installed all the updates on both my XP Home computers and have not had the problems you stated, also there are other options available to fix the problems other than do a repair install, seems a little drastic to me .
I have had to reinstall 12 computers so far. Here's the deal...
Microsoft put out 2 bad updates, (KB890859) & (KB893066)
This is a known problem that has not been acknowledged. You will have to reinstall XP by booting from cd. Go thru the motions of installing for the first time, you'll get to a screen (after pressing F8) that asks to hit "enter" to install or "R" to repair, choose repair, it will go automatically with very little user interaction. After the reinstall your system should be right back to normal. First thing, change Auto Updates in Control Panel to just download, not auto install. Next goto Windows update site and do a custom install so that it shows you the updates. Uncheck (KB890859) and (KB893066) and choose to hide these updates, install the updates and that's it.
Note: (KB890859) causes the reboot problem & (KB893066) causes the internet to quit, unable to obtain an ip address. (KB893066 only happened to half the computers I reinstalled, you can install it and if the internet stops working go to "Add/Remove Programs", click @ top to show updates and uninstall it.