Our site was having the same issue for 100+ computers using Windows Update Server. All were XP or 2003. We resolved it by doing the following via a script:
- Uninstall KB976569 - No Reboot Required
- Install KB974417 - No Reboot Required
- Install KB976569 - No Reboot Required
Apparently KB974417 needs to be installed before KB976569
Similar issue XP Pro system, trying to install KB974417 getting error, and finding 0x80070643 code in the errorlog for the update error.
Process above fixed the issue for us.
By way of background this box is a test system, which is not left turned on.. It can sometimes go months between being 'powered up'. So it tends to get updates in clumps when it is turned on to be used for some particular bit of testing that calls for the config on the box. That might have a lot to do with what appears in this case to be an 'order sensitive' issue (where a system turned on and updated more frequently may not have had this issue
--Chuck