windowsupdate failed after repair install of XP SP2 - Li_n

I felt my 2y old install of XP needed a fresh start so I did an in place
reinstallation from the XP CD. I chose the upgrade install in order to avoid
installing and configuring all the programs. I hope I don't have to resort to
reformatting the C: drive...

The first time I started the upgrade install from normal windows with
Kaspersky intenet security disabled. After the installation was complete,
windows update found 79 updates, but all the updates failed with error code
0x80070002.  I followed the KB article about this code, renamed
SoftwareDistributions directory under windows after stopping update service.
I also renamed Catroot2 directory under system32 as suggested by some earlier
threads.   But the fixes didn't work.  I suspected Kaspersky AV was
interfering with some of the reinstallation so I removed it and started the
XP upgrade intall from safemode again.

The second install was completed OK. I needed to reinstall the ATI drivers
as before. I did the WGA validation because I got some prompts about WGA in
the first round of reinstallation. Windows update first installed windows
installer, then downloaded 79 updates but all of the updates failed with the
following error code (0x80004002) at the end of the log file (on the WU
website the failed updates are not showing with red X in update history):

2007-08-19	22:27:59:843	2988	c7c	Misc	  = Process:
C:\WINDOWS\system32\wuauclt.exe
2007-08-19	22:27:59:843	2988	c7c	AUClnt	FATAL: Error: 0x80004002. wuauclt
handler: failed to spawn COM server
2007-08-19	22:27:59:843	1196	b18	Handler	FATAL: 0x80004002: ERROR: Remote
update handler container process created (PID: 2988), but exited before
signaling event
2007-08-19	22:27:59:843	1196	b18	Agent	  * WARNING: Exit code = 0x80004002