Most problems with Windows Update can be solved by the simply renaming the folder SoftwareDistribution from the Windows directory. To be able to do so you are required to stop the service Automatic Updates (if you’re on Windows XP or Server 2003 or earlier) or the Windows Update service if you are on Windows Vista or Windows Server 2008 and later.
The SoftwareDistribution folder is automatically recreated when you start the service again. Bear in mind that you will lose the update history when performing this trick, something you can get back of course if you change the name of the SoftwareDistribution folder instead of just deleting it.
Also keep in mind that deleting the SoftwareDistribution folder is for fixing problems with searching for updates or contacting a WSUS server for instance, you will not solve problems installing various hotfixes or updates using this method. To troubleshoot problems related to Windows Update or Automatic Updates look in the WindowsUpdate.log located in the root of thew Windows directory for clues. For problametic hotfix installations see the hotfix log file.