So after the Vista episode - I started reinstalling Windows XP.. but ran into an interesting windows update issue. Don’t know what caused it - but the symptom was it downloaded a few updates like IE7 and a few security updates, but wouldn’t install them. It said it couldn’t install - no real error details. The problem was the same through IE windows updates, or automatic updates. The solution was rather odd but it worked:

regsvr32 wuapi.dll
regsvr32 wuaueng.dll
regsvr32 wuaueng1.dll
regsvr32 wucltui.dll
regsvr32 wups.dll
regsvr32 wups2.dll
regsvr32 wuweb.dll

As soon as I registered the dll’s and went back to Windows Update, immediately it installed the updates. I don’t know if it was a windows installation issue or if me running updating some other drivers while windows update was running caused the issue (hey, I’m a multitasker). Hope it helps someone else out there.