See...
• Microsoft Update Product Team Blog: Windows Update and Automatic Reboots
http://blogs.technet.com/b/mu/archive/2008/10/02/windows-update-and-automatic-reboots.aspx
• Change how Windows installs or notifies you about updates [good for Vista, too]
http://windows.microsoft.com/en-us/windows7/Change-how-Windows-installs-or-notifies-you-about-updates
If you select the Download updates but let me choose whether to install them option, you will be able to decide when downloaded updates are installed - then only Approve an update when you're willing and able to reboot (if need be).
Tip: Assume an update will require a reboot so don't approve the install of any update unless & until you're ready & willing to reboot.
IMPORTANT! => Any change you make to your Automatic Updates (AU) setting now will
NOT be applied to any updates already in the installation queue. As far as AU is concerned, you've already Approved such updates.
Related...
• Microsoft Update Product Team Blog: Update Notifications and Install-at-Shutdown Behavior
http://blogs.technet.com/mu/archive/2009/06/26/update-notifications-and-install-at-shutdown.aspx
[Last Revised - 29 April 2012, 18:09 UTC]