Windows Server 2003 Service Pack 2 failed!

We are trying to install SP2 for Win Server 2003. Every time we get the error
message indicated at the message title. I also downloaded the sp2 .exe file
to run it manually and got:

"The Service Pack 2 h:\.....\i386\update\update.inf is not correct"

I also downloaded the .iso image and got the same error. I look at my event
log:

The application-specific permission settings do not grant Local Activation
permission for the COM Server application with CLSID
{61738644-F196-11D0-9953-00C04FD919C1}
to the user NT AUTHORITY\NETWORK SERVICE SID (S-1-5-20). This security
permission can be modified using the Component Services administrative tool.

For more information, see Help and Support Center at
http://go.microsoft.com/fwlink/events.asp.

I followed their advice, but still keep getting same error. These are the
logs:

svcpack.log
13.094: DoInstallation: Failed to unregistering spuninst.exe for recovery.
13.094: The Service Pack 2
c:\windows\softwaredistribution\download\456b2012d 88fef6ab6d7be85fa66de38\update\update.inf file is not correct.
13.094: Update.exe extended error code = 0xf00c

WindowsUpdate.log
2007-08-07 14:09:26:703 524 1bcc Report REPORT EVENT:
{DA242D30-0544-45A4-8733-F3ABC41437D7} 2007-08-07
14:09:21:703-0400 1 161 105 {5C23105E-2007-449D-B9C0-5F60735DF63B} 102 8007f00c AutomaticUpdates Failure Content Download Error: Download failed.
2007-08-07 14:09:26:703 524 1bcc Report REPORT EVENT:
{41E349F4-E61F-4BC3-82CB-56A7E7A4F328} 2007-08-07
14:09:24:218-0400 1 161 105 {FB97B8B1-11FB-4282-A6F6-35A7835C8D6E} 101 80242008 AutomaticUpdates Failure Content Download Error: Download failed.
2007-08-07 14:09:26:703 524 1bcc Report REPORT EVENT:
{35BB15C5-9C07-4633-8DEC-969082E5B12F} 2007-08-07
14:09:25:578-0400 1 189 102 {00000000-0000-0000-0000-000000000000} 0 0 AutomaticUpdates Success Content
Install Installation Ready: The following updates are downloaded and ready
for installation. To install the updates, an administrator should log on to
this computer and Windows will prompt with further instructions: -
Cumulative Security Update for Outlook Express for Windows Server 2003
(KB929123)
2007-08-07 14:09:55:296 524 1f50 AU ########### AU: Setting new AU options
###########
2007-08-07 14:09:55:296 524 1f50 AU Setting AU Approval Type to 1
2007-08-07 14:09:55:296 524 1f50 AU # Policy changed, AU refresh required
= Yes
2007-08-07 14:09:55:296 524 1f50 AU # AU disabled through User preference
2007-08-07 14:09:55:296 524 1f50 AU AU Refresh required....
2007-08-07 14:09:55:312 524 1f50 AU Can not perform non-interactive scan if
AU is interactive-only
2007-08-07 14:09:55:312 7548 12c0 CltUI AU client got new directive =
'Shutdown', serviceId = {7971F918-A847-4430-9279-4A52D1EFE18D}, return =
0x00000000
2007-08-07 14:09:55:343 524 df8 AU AU received handle event
2007-08-07 14:10:24:578 6300 167c Misc =========== Logging initialized
(build: 7.0.6000.374, tz: -0400) ===========
2007-08-07 14:10:24:578 6300 167c Misc = Process:
C:\WINDOWS\system32\rundll32.exe
2007-08-07 14:10:24:578 6300 167c Misc = Module:
C:\WINDOWS\system32\wuapi.dll
2007-08-07 14:10:24:578 6300 167c ARP Connected to update session.
2007-08-07 14:10:24:578 6300 167c ARP User is allowed to install published
content.
2007-08-07 14:10:24:609 6300 167c ARP Managed service NOT found.