The severity rating is Critical for Windows 2000 users. Windows 2000 users is vulnerable to LSASS, LDAP, PCT, Winlogon, Metafile, Utility Manager, Local Descriptor Table, H.323, Virtual DOS Machine, Negotiate SSP, SSL, ASN.1 "Double Free". If you can't succeed in installing the patch, you might want to follow the work-arounds to at least protect your system.
You can find the work-around for Windows 2000 at http://www.microsoft.com/technet/security/bulletin/MS04-011.mspx
Look for General Information>Vulnerability Details and read the work-around.
Some system failed to install this update because of Sasser worm infection. I'm not saying that your system is infected with Sasser worm, but you might want to verify that it is not.
Also you might want to review the Event Log of your Windows 2000 which should show you which Windows services is being called when you are trying to install this particular update. Maybe temporarily disabling that service will allow you to install the patch or you might want to install the patch in Safe mode or try installing the update in command prompt.
To install the security update without any user intervention, use the following command at a command prompt for Windows 2000 Service Pack 2, Windows 2000 Service Pack 3, and Windows 2000 Service Pack 4:
Windows2000-kb835732-x86-enu /passive /quiet
To install the security update without forcing the system to restart, use the following command at a command prompt for Windows 2000 Service Pack 2, Windows 2000 Service Pack 3, and Windows 2000 Service Pack 4:
Good luck and hope the above helps.