MS Update brings machine to grinding halt

I am having a couple of problems with my Athlon 3200 based WinXP SP3 machine that runs on a network behind a router.

1. The first (and worst) problem is that when my computer starts and runs MS update or when I run MS Update. It starts the process svchost.exe which, after update has been running for a couple of seconds, commits the processor to 97-99% which brings the computer to a grinding halt (almost) for anything up to 3-4 mins.
I am using AVG free and Zone alarm (real time), Both of which I have disabled, but this makes no difference.
I have run the SAS, Spybot, Anti-Malware, Combofix, MGtools AVG and AdAware, but apart from the odd tracking cookie, none of them showed up any problems (to me, anyway). I have attached the various reports which include the HijackThis log.
This problem has been with me now for a couple of months and unfortunately I cannot associate it with any particular activity, change or installation that I have made to the machine.
There seems to be a lot of dross starting on the HJT log, but I am not experienced enough to diagnose which is required and where they are started. Your comments and help on my main problem would be more than welcome.

2. System restore does not work. It spends quite a bit of time 'restoring files' but then gives the message along the lines of 'System restore was unable to restore your conmputer to ... Your compuer has not been changed' This is even to a restore point created last night after running all the anti malware programs for you.

I was not sure to lump these two problems together, but as they might be related, I thought that I had better.

Your comments and help would be more than welcome, as I am seriously considering a 'Format C:' but don't want to do this for obvious reasons.
TIA Trevor

 

Plodr
Thanks for your reply. I'll try your suggestion on the machine that's giving me problems later today. I'm up to my armpits in heavy house decorating at the moment, and Mrs. M8 must be obeyed.
Trevor

 

I registered the components as suggested but it made no difference.
There seems to be two entries in the windows update log that are the main cause of the problem. Each one taking about two mins to run. They are
2008-08-21 14:17:46:234 1348 fd4 AU AU finished delayed initialization
2008-08-21 14:19:32:546 1348 b20 Driver DriverUtil marking {55D886B0-2B31-46AD-AA3F-A8C0F9E7220F}.100 e_detectionStateInstallable

And:
2008-08-21 14:19:34:796 1348 b20 Agent * ServiceID = {7971F918-A847-4430-9279-4A52D1EFE18D}
2008-08-21 14:21:09:171 1348 b20 Driver DriverUtil marking {55D886B0-2B31-46AD-AA3F-A8C0F9E7220F}.100 e_detectionStateInstallable

Any further suggestions would be welcomed
Trevor

 

Plodr. Thanks for that. Just checked it out. Automatic Updates is set to Automatic and is started (even though it's turned off in the Security Centre AU settings.)
Trevor

 

Plodr.
Thanks for trying.
Anyone else have any ideas please???
Trevor