Hi Julie,
I deleted my previous post regarding the commands I requested you run because I remembered another epic troubleshooting event where the user wasn't able to install Windows Updates. I just checked through that and I noticed that the error he was seeing in his log files is the same one that appears in your log file which you posted earlier.
So could you please do the following.
- Hit Windows key + R to open the Run command, copy/paste windowsupdate.log and click OK. This will launch the Windows Update log file which is just a text file.
- Click Edit ---> Find, type OOBE and click Find Next.
- If it jumps to OOBE, scroll down a bit and look for the text you see in the screenshot. If you can see that as well, your machine is in Audit mode which blocks automatic updates from installing.
I'll wait to hear from you before proceeding further.