80246005 translates as connection to the server can't cope

I contacted Microsoft regards the above error and this is the response I
received. The first paragraph explains why the installation is failing and
the rest details how to work around the problem. I hope this helps somebody.

As you may know, SP2 has been just released via Automatic Update/Windows
Update and millions of Windows XP users are downloading it from the Windows
Update servers, which makes the server load is durative high. Thus,
connection to the server drops in some cases and the installation will fail.

In this situation, I suggest we perform the following steps to manually
install Service Pack 2:

1. Download the full update pack from the following link and save it to the
hard disk:

Windows XP Service Pack
<http://download.microsoft.com/download/1/6/5/165b076b-aaa9-443d-84f0-73cf11fdcdf8/WindowsXP-KB835935-SP2-ENU.exe>

2. Perform a system check:

a. Click Start, click Run, input "SFC /PURGECACHE" (without quotation marks)
and press Enter. (Note: There is a space in the middle of the command.)
b. Click Start, click Run, input "SFC /SCANNOW" (without quotation marks)
and press Enter.
c. The System File Check will then start, which will repair system files.
(We need to insert the Windows XP installation CD during the procedure. Thus,
if an Installation CD is not available at this time, please skip this step
and go on with the following step to install Service Pack 2 manually.)

3. Install SP2 in Safe Mode:

a. Restart the computer.
b. Keep pressing the F8 key until the Windows Startup menu appears.
c. Choose Safe Mode, and press Enter.
d. Try to install SP2 again.

Note: In Safe Mode, your system display and Desktop will look and perform
differently than in Normal Mode. This is only temporary.