System functions not working

[BudE]

Hi,

I am trying to fix a system but it has something wrong with it. First, Windows Update doesn't work. When I try to run it I get the message: Windows update cannot currently check for updates because the service is not running. You may need to restart your computer. That doesn't do it though and when I checked for services and found wuauserv I tried to click to change it but that doesn't work. Under Admin Tools I went to "services" and found Windows Update and changed to both "automatic" and "manual" with no success. I reboot and try Update and get the above message again.
Also, I can't seem to make the desktop stay the same after each reboot. The picture that was on the background is nowhere to be found. I did get this message "C:\Windows\System32\config\SystemProfile\Desktop is not acceptable. Access denied."
What is going on with this system? I've never had problems like this and am totally lost as what is wrong and needs to be done. Already scanned and cleaned out the viruses and trojans.What next? Help.

Thanks,
BudE