Had this problem after being forced to format and reinstall my operating system. REALLY sucks and it's DAMN frustrating. I had a number of updates that simply failed to install. I contacted microsoft, and here is the answer:
1. Please download the file from the following link:
2. Save the file to "C: drive".
3. Click "Start", "Run", type: "C:\WindowsUpdateAgent30-x86.exe /wuforce" (without quotations) and then press "Enter" to install the Windows Update engine.
There is a space between "C:\WindowsUpdateAgent30-x86.exe" and "/wuforce".
Let’s now try Windows Update again and see if the issue has been resolved. Please let us know if this step has resolved it. If it has not, please proceed to the next step.
Suggestion 2: Register DLL files
By trying this step, we can check the update engines.
1. Close all instances of Internet Explorer.
2. Click "Start" and "Run", type "REGSVR32 ATL.DLL" (without quotations) in the open box and click "OK".
Note: There is a space between REGSVR32 and ATL.DLL
3. Register the files listed below:
If you are using the Microsoft Update Site, please register the following files as well
Note: Please register all the files. While registering each .DLL file you should get a "succeeded" message. If any error message is encountered, please let me know the exact wording.
For more information, please refer to the following Microsoft Knowledge Base article:
Updates are not installed successfully from Windows Update, from Microsoft Update, or by using Automatic Updates after you repair a Windows XP installation