someone else with a somewhat similar problem:
http://www.vistax64.com/sbs-server/254359-how-delete-update-progress-alert.htmlsome information about the new feature in 2008 SBS for Windows Update:
http://blogs.technet.com/sbs/archive/2009/06/23/update-services-in-sbs-2008.aspxWhat happens when you go to the windows update site manually on the SBS server?
http://windowsupdate.microsoft.com/