I’ve seen this happen a few times now and figured I would share the quick fix.  If after installing Service Pack 3 for Windows XP the Windows Updates stop working and instead failing, run the following commands either in a command line or in a batch file.

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