I have had Windows Updates go "bad" on me a couple of times, both on XP and Vista.
To be honest fixing it has not been easy. I am very computer literate and I have had to do some very complex things to try to get it working again.
In fact I still have an XP machine that wont use Windows Updates normally and I have to go to a special web site to get it to work (I will post the web site in a moment when I find it).
Some people running Vista have downloaded a special tool to try to fix problems. If you are running Vista try that.
Go to this web page and scroll down till you find the place where it says to download it.
http://support.microsoft.com/kb/947821
I have not done this myself so have no idea how good it is.