Anyone who supports Windows XP computers will no doubt be familiar with the recent problems when trying to automatically download and install critical security updates from the Microsoft Update site or through the Automatic Update client. I work in an IT support role in a large corporation. We have experienced many frustrating hours and much downtime troubleshooting this issue. Frequently, a computer will become unstable, freeze, and not allow any new programs to be run. When you open the Task Manager, you see svchost.exe eating up 100% of the CPU resources. If you can open up the Services console quickly enough (run services.msc) as Windows loads, you can stop the Automatic Updates service which will allow you to work on the computer. Microsoft has released some hotfixes, as well as a new version of the Windows Update Agent (version 3) for these well-known issues, however they don't seem to be helping.
In one instance, one user (a high-level executive in the company) brought his laptop to us after experiencing lockups and overall instability. He was understandably upset. We rebuilt the machine but when we attempted to download and install the approximately 80 updates that needed to be applied (most of them critical security updates), the machine would lock up and sit there forever. We worked on the machine for over 8 hours. The user was very frustrated and was leaving on a flight to India soon. Unfortunately, we could not resolve the problem and we had to disable the Automatic Updates service entirely and send him out with his laptop in this vulnerable state. According to a Computerworld article, these problems are fairly widespread and Microsoft is supposedly working on a fix. (Sources: Computerworld, Updating the Windows Update Agent, Windows Update Agent 3 (for 32-bit, x86), Microsoft hotfix kb927891)
UPDATE 5/14/07: This morning, I tried installing the new Windows Automatic Update Agent version 3 along with the existing two Microsoft patches (KB916089, and KB927891), however, the moment Windows tries to download any new updates (either through the Microsoft Update site, or through the AU client), svchost.exe consumes all of the CPU cycles and the system becomes unstable.
Not all machines are affected, just an unfortunate few. And in the majority of cases they seem to be laptops of users who travel frequently. We have worked on this machine for days on end to no avail. Hopefully, Microsoft will release a fix for this soon as we have exhausted all other means. If you have a fix for this, please leave a comment.