You mean you even renamed the SoftwareDistribution folder? I must have restarted my PC like 5 times in the span of 5 hours trying to fix this issue. Just glad that it's not related to anything malicious, and I hope it really is MS' servers.
In the meantime, I guess there's no other option except to use manual updates for MSE.
If you can get 'manual' updates, I'm amazed. I was already on manual updating, and I can't even get those anymore. Don't you just love MS?