On my work notebook running XP I ran into the issue of WU failing after applying XP SP3. I found that this solution:
http://www.itexperience.net/2008/05/23/automatic-updates-fail-after-installation-of-windows-xp-sp3/
Worked for me. You’re re-registering the following DLL-files.
Click Start, Run, and enter these commands individually:
regsvr32 /s wuapi.dll
regsvr32 /s wuaueng1.dll
regsvr32 /s wuaueng.dll
regsvr32 /s wucltui.dll
regsvr32 /s wups2.dll
regsvr32 /s wups.dll
regsvr32 /s wuweb.dll