For everyone that's encountered this error. The solution recommended by Microsoft which I've tried and it works is as follows: (I've posted it for the benefit of those still looking for an answer)
This error code is typically caused by security programs, incorrect Internet Explorer configurations or spyware items. I suggest we take the following steps to get this issue resolved:
Step 1: Reset Internet Explorer settings, and disable third-party Internet Explorer plug-ins.
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1. Click Start, Run, type: inetcpl.cpl and press Enter to open the Internet options window.
2. Click "Delete Cookies" and select Yes to confirm.
3. Click "Delete Files" and select Yes to confirm.
4. Click Settings, click "View Objects". Delete all the objects in this folder. If some objects cannot be deleted, please restart the computer and try again.
5. Switch to the Security tab, select Internet and click "Default Level".
6. Switch to the Privacy tab, and click "Default" button.
7. Switch to the Advanced tab, click the "Restore Defaults" button and then deselect the "Enable third-party browser extensions" option.
8. Click OK.
Now reboot your system and test the Windows Update site and see if the issue is resolved and let me know the result. If the issue persists, we can refer to the next step.
Step 2: Use Ad-aware to remove spyware.
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1. Download and install Ad-Aware from this page: http://lavasoft.element5.com/support/download/
2. Click Start -> All Programs -> "Lavasoft Ad-aware SE Personal" -> "Ad-Aware SE Personal" to start Ad-Aware.
(Note: If there is a popup box asking whether or not check definition update, please click OK and click Connect. Click OK to download and install the latest definition, and then click Finish.)
3. Click the Start button in the Ad-Aware window, and then click Next to start the scan.
4. After the scan is finished, click Next, click the check boxes on the "Critical Objects" tab to select them, click Next, and the click OK to confirm the removal.
For detailed information about spyware items and the above Internet Explorer configurations, you can refer to this Microsoft Knowledge Base article:
Unexplained computer behavior may be caused by deceptive software
http://support.microsoft.com/?id=827315
If the issue persists, I suggest we take the next step.
Step 3: Disable the software that can affect Windows Update.
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The local Windows Update engine can be affected by some third party programs.
Please temporarily disable all antivirus and security components such as Stegnos, DiamondCS Process Guard, Web Trap component of PC-cillin, Surfin Guard Pro, download accelerators/enhancements, Download Accelerator Plus, spyware applications and other similar programs.
Step 4: Rename the temporary folder of Windows Update.
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This behavior may occur if the temporary folder of Windows Update has been corrupted. We can refer to the following steps to rename this folder. Please be assured the folder will be created again when we visit the Windows Update site again.
1. Click Start, Run, type: cmd and press Enter. Please run the following command in the opened window.
net stop WuAuServ
2. Click Start, Run, type: %windir% and press Enter.
3. In the opened folder, rename the folder SoftwareDistribution to SDold.
4. Click Start, Run, type: cmd and press Enter. Please run the following command in the opened window.
net start WuAuServ
FYI
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Thank you for your cooperation. Unless you have any further questions or concerns regarding this particular Service Request, I will go ahead and close this case for administrative purposes. If this is premature, please feel free to send email to me or respond by posting a supplement to this case; we can then continue working together. It's my pleasure to be of assistance.
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Best Regards,
Ray Zhang
mailto:v-30rayz@mssupport.microsoft.com
Microsoft Support Professional
Very satisfied customers are my top priority. Please let my manager or me know what you think of the level of service provided. You can send feedback directly to my manager, Rick Lu at <mailto:v-30rilu@mssupport.microsoft.com >.

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