This is the only thing that worked for me, been running like this with no issues for about 2 years:
Browse to C:\Windows\SoftwareDistribution, right click on the Downloads folder, click properties. Security Tab, Advanced, Change Permissions, Disable Inheritance, Remove all inherited permissions from this object, Apply.
To enable windows updates, reverse this process. You may have to stop the service or go to safe mode to this, though I don't remember doing that.
Browse to C:\Windows\SoftwareDistribution, right click on the Downloads folder, click properties. Security Tab, Advanced, Change Permissions, Disable Inheritance, Remove all inherited permissions from this object, Apply.
To enable windows updates, reverse this process. You may have to stop the service or go to safe mode to this, though I don't remember doing that.