You cannot permanently move or redirect the core Windows Update installation directory off the main C: drive, but Windows can temporarily use an external drive if your PC lacks sufficient space during an update.
If your internal drive is too full to run an update, Windows will prompt you to connect external storage. Connect an external USB drive or hard drive with at least 10 GB of free space, then go to Start > Settings > Windows Update. If low disk space is preventing the update, click Fix issues when it appears. Choose your external drive from the drop-down menu and follow the prompts.
Windows still installs the final update files onto the internal drive. The external drive is used only to hold temporary staging files during the update process.
As an alternative, you can manually download specific update packages from the Microsoft Update Catalog and save them to an external drive. You can then run the downloaded update package from the external drive to apply the update to the system.
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hth
Marcin