Multi-step fix: 1. Get off the cable becasue MS Updates are blocked 2. Use the wireless via the open port on the firewall 3. download and run KB947821 4. reboot 5. navigate to http://support.microsoft.com/mats/windows_update/ and click the Run Now button
The initial symptom was a message upon starting Windows Update that the Windows update service wasn't running, when in fact it was. The 2nd fix we've discovered is summarized as: 1. Go to Services and disable Windows Update Service 2. Reboot 3. Locate c:\windows\softwaredistribution\ folder and delete all contents including the folder 4. Set Windows Update Service back to Automatic (Delayed Start). 5. Reboot 6. Check for updates
this 2nd fix has worked on 2 machines so far, and we have lots more to do (new systems rollout in progress). Also this 2nd fix has worked without the first reboot.