I found an answer that worked for me with my updates downloading, but always
failing to install.
I copied the text from a thread, but will also provide the link:
FYI - Windows XP Update install failure Problems
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This is for anyone who might have a similar problem and needs a possible
answer right away.
I was having problems with Windows XP downloading, but failing to install
the updates.
I had thought it was part of a major Trojan and Virus infection that I had,
but the infection was cured and the problem remained.
It turns out that what had happened was that Windows Update's .dll's became
unregistered and had to be re-registered to the operating system.
Here's Microsoft's answer to the problem that worked for me:
Go to "run" in the start menu.
Type in cmd.
Type each of the following commands to re-register Windows Update .dll's
regsvr32 wuapi.dll
regsvr32 wuaueng.dll
regsvr32 wuaueng1.dll
regsvr32 wucltui.dll
regsvr32 wups.dll
regsvr32 wups2.dll
regsvr32 wuweb.dll
Rerun Windows Update
http://forums.techguy.org/windows-nt...e-install.html