A lot of people are apparently having a problem with failed Windows Update patch installations on machines with Windows XP Service Pack 3. The problem occurs regardless of whether Automatic Updates are configured or if instead the user manually visits the Windows Update site. The updates can be downloaded, but almost immediately after the installation is attempted, the following error message appears (in the case of using Automatic Updates):
Some updates could not be installed
The following updates were not installed:
<list of updates appears here>
(This problem does not appear to be dependent on any particular update.)
There is a Microsoft support article that describes steps that resolves this problem, although note that the description contained in the support article does not appear to directly describe the SP3 condition which apparently causes this particular problem. The specific cause has to do with a orphaned DLL that exists on the machine, but does not have a correctly correlated registry entry.
The Microsoft support article is here.
FYI, I used Method #1 of the two described in the article. Worked great for me!