I'm cross-posting a reply here form a different forum, because the original post was for Server 2003 but this also now happens on Windows XP SP3 as well:
I go to Start..Microsoft Update. The system "loops" over and over for about 3-4 minutes jumping between "Checking
if your computer has the latest version of Windows updating software for use from the website..." and "Checking
for the latest version of Windows updating software..."
This occurs even after running the KB 971058 FixIt. I think Microsoft has broken something with their "new" updater that came out last month. We did not have these symptoms before updating the updater.
After 3-4 minutes of looping, IE just becomes unresponsive and hangs.
Checked WindowsUpdate.log and I also have a file signature "not trusted" warning (I've forgotten the file it's noting--it was posted specifically in the original poster's message on the Server 2003 forum), but it's toward the end of the WindowsUpdate.log file.
Update: I now have this issue on SEVERAL systems (every one I've tried) across completely different organizations (unrelated PC's, unrelated networks)---it appears Windows Update has been totally broken in the last few days on Windows XP (probably Server 2003 as well). If you run Start...All Programs..Microsoft Update, and get prompted to download the newer updater, once you do it, you will get this infinite loop and all updating is now broken.
-Dan