What happens if you go to
http://www.update.microsoft.com/micr....aspx?ln=en-us
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This might also be worth a go?
Check the 'hosts' file in xx:\windows\system23\drivers\etc
Comment out references to Microsoft using # at the beginning of the line (used a text editor) and save the changes. The update program might work.
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Have you checked the Windows firewall setting as well?
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Check the active x settings?