A couple of thoughts.
As I already suggested, have you set your download preference by clicking
'Start' > 'Control Panel' > 'Automatic Updates'? You should do that first
thing. Mine is set to notify, but NOT to download or install anything without
permission. You can also set it to do absolutely nothing. You should do this
immediately so you have some control. FWIW, these download messages will keep
showing up unless you choose to completely stop them here. Not always a good
idea.
When the popup appears, have you actually tried clicking on 'install'? If
it's really a MS or IE update, it'll allow you to view what's being offered
and let you choose. I believe it's the second of 2 options. Don't select the
1st option(their recommendation), as that'll just start installing everything
without your consent. Choose the 2nd option, view what updates to download,
then either choose/proceed or don't choose any.
In your immediate case, have you tried a 'System Restore', which can reset
your computer to an earlier time.. before that popup showed up? Sometimes
that's the only way to sidestep these annoyances. This function can be found
at 'Start' > 'Help'. It's right there on the opening page of the Help
section. Hopefully there is an earlier restore point date available that
preceeds when your problem popup began. BTW, I've gotten rid of IE 7 and gone
back to IE 6. Too many quirks.
Best, Paul