I'm not sure what has happened with the WinXP Automatic Updates lately, but a while ago I noticed (for the first time) I had an option to Shut down and install updates at the same time. I tried it the second time I saw it and naturally it hung my whole system.
The machine wasn't working properly after that of course, but I managed to get in and install the updates more or less manually.
Today I got new problems with the updates. It started with a crash in the svchost.exe process and I tried to debug and see what it was. Windows popped up a webpage telling me there was a fix for this specific "Generic Host bla bla bla" problem. I installed it, it told me it won't fully work until I restart my machine. Alright, I kept running for a while, got the svchost.exe crash again and decided to restart.
After the restart, WinXP wanted to start install some Updates it appearently had in queue! At login? Weird. It didn't ask and I couldn't stop it. Of course the installation failed as it hung my whole box. I let it sit there for a long time before I decided to restart the machine.
Anyway, what saved me today was to restart the machine, hit F8, select to start with a "configuration that worked" or whatever the menu option says. Now I'm in, I've configured Automatic Updates in a way so that I will decide myself when to download and install. All seems to work WAY better now.
I wonder how far away SP3 is... I think I'm going for Vista as soon as I get my hands on the RTM version.
UPDATE: LOL, I was too fast... after this "manual" Windows Update and the recommended reboot, I got a new crash after logging into Windows, now it was the AutoUpdate.exe crashing on my... yeah... LET ME WORK FOR LOVE'S SAKE!