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Microsoft released Knowledge Base article 916089, FIX: The computer may stop responding for 40 or more seconds when you run a scan for updates or when you try to apply an update on Windows Server 2003, on Windows XP, or on Windows 2000. As many people report an unresponsive system and high CPU utilization prior to receiving the 0x8ddd0009 error from Microsoft Update / Windows Update, it stands to reason that applying the hotfix presented in the article may be of help to some people.
Unfortunately, the hotfix requires one to contact Product Support Services.
The culprit appears to be Windows Installer. Windows Installer 3.1 v2 is a prerequisite, and the only file included in the hotfix is MSI.DLL (dated October 2006).
The KB article states:
This update decreases the duration of a scan that uses the Windows Update Agent. However, a scan is still a CPU-intensive operation. The Svchost.exe process contains the Automatic Updates service. When you perform a scan, the Svchost.exe process can cause CPU utilization to reach 100 percent for a prolonged time. For example, Microsoft Office updates use Windows Installer. When Microsoft Office updates are detected, these updates can contribute to 100 percent CPU utilization for a prolonged time.If you try this update and it helps, please post a comment about your experience!