On two Windows XP machines of mine, the installation of post-SP3 patches has broken Windows Update.
I first, when it happened on one machine. Today, on a computer with very different hardware, the problem repeated itself.
In both cases the computers had no application software installed. Each had only Windows XP SP2 and a handful of vendor installed utilities. Neither machine had any anti-malware software of any kind, not even a firewall (other than XP's firewall). Both were running Internet Explorer 6.
Each time I started by installing SP3 and rebooting. Next, I ran Windows Update manually and opted to install all the post-SP3 patches, with the exception of Internet Explorer 7. I prefer to install IE7 by itself. The patches install fine, and I reboot again.
At this point Windows Update no longer works.
As, it's best to hold off on Service Pack 3.
One Windows XP test machine started out with no service packs. I installed SP2, rebooted, installed IE7, rebooted, installed SP3, rebooted and then installed all the post-SP3 patches except for one. One patch had to be omitted because without something to install there is no way to know that Windows Update is broken. Specifically, I chose not to install KB923789, an update to the Adobe Flash player. The post-SP3 patches that I did install were KB951748, KB951978, KB890830, KB951376, KB950762, KB950760 and KB942763. One of them broke Windows Update.