There is a known bug on some computers running Windows XP SP2 with Ofice 2003 installed. When Automatic update is running an update cycle the computer becomes unresponsive.
The is a fix here but this fix apparently does not fix the problem on all computers. I talked to a friend at PSS and he told me that it can be fixed by downloading a new AU client. This is not as easy as it sounds… because it only exists in the beta distibution of WSUS 3.0… and there is no easy way to extract it from there.
To fix this for now you need to connect the computer and let it update once from a WSUS 3.0 update server. That way it will get the new AU client.
Edit: There is now a possibility to download the WSUS 3.0 Client from Microsoft to solve this problem. I found this info here. Download links, look below.
Edit2: I found some more links to this problem:
Download 3 for SBS