Thank you Robin and Freudi for the suggestion.
It's toward the end of Friday when I tried the disabling all the AddOns
approach.
Unfortunately, even after disabling all AddOns (including the Microsoft
ones), KB 916281 still gave me the same problem.
So I removed 916281 once again and downloaded Internet Explorer 7. Well
after I installed IE 7, I no longer got the Update notification for 916281.
I guess IE 7 addressed the problem as the 916281 did to IE 6 ?? After
testing all the programs, I left the office for the week.
I asked the bookkeeper about the computer this morning. She was the actual
user for this computer. She said IE 7 worked great and she had not
experienced any trouble yet. (Any reward for saying good things about IE 7?
:P)
I did not see Freudi's post until today. I will try the Event Viewer
approach later this week when I have time.
TO Fuserink:
Thank you for your post. It's nice to know that I am not the only one
having this problem.

I also find it ironic that the "patch" make the
program that it's supposed to fix unusable. But I guess it only happens to
very few users. What a way to push me to install IE 7! (even though I was
thinking about switching to Firefox lol)