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Please note that this fix was tested on Windows Vista but should work on other versions of Windows.
Recently I was experiencing some issues with a Windows Vista machine not updating from Windows Update correctly, eventually it was tracked down to a single registry key in the following location:
If you set the DisableWindowsUpdateAccess flag to 0 then it should now work, if you do not want to do this manually you can also download a fix below:Windows Update Error - Code 80240025 Fix (6462 downloads)