Windows Update failed: Windows Installer 3.1r2, with error 0x80070005

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I have a problem with Windows Update. I found the relevant post that had a link to Microsoft Support, but that link is dead (crap!)... So, now I'm posting with a similar problem:

I'm running XP Home SP2, and when I try updating I get this error:

0x80070005

Ok, so this means access denied, right? Alright, basically this computer is entirely clean from viruses/spyware because I just spent 3 days cleaning this system out and repairing it. Anyhow, I also tried manually installing windows installer version 3.1 (release 2!) and the log specified that the update was denied access to the registry. Everything was going ok until it needed to add stuff to the registry.

So, any ideas? I'm thinking I have problems with registry access. I'm running as an administrator and I ensured that HKLM\Software\Microsoft\Windows\CurrentVersion\WindowsUpdate had 'Everyone' allowed with "Full Access" as well as HKCR has 'Everyone' with "Full Access".... What else is there??

Also, I posted the relevant C:\WINDOWS\windowsupdate.log file so you can see what's going on.

I really appreciate anyone that can help me with this!

Thanks!

(I only posted the relevant section)

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2006-01-31 09:55:18 2396 964 Handler :::::::::::::
2006-01-31 09:55:18 2396 964 Handler :: START :: Handler: Windows Patch Install
2006-01-31 09:55:18 2396 964 Handler :::::::::
2006-01-31 09:55:18 2396 964 Handler : Updates to install = 1
2006-01-31 09:55:18 2396 964 Handler : Installing update {F2FCA9BF-05AD-460A-977C-355CE5734118}.102
2006-01-31 09:55:18 2396 9e8 Handler Installing with parameters=/norestart /quiet -er, sandbox=C:\WINDOWS\SoftwareDistribution\Download\ad9c4c2a779933f83b51a49a2c88838d.
2006-01-31 09:55:23 876 37c Report REPORT EVENT: {C8B7F86B-E0FD-4479-BD62-2B9D9784BB7E} 2006-01-31 09:55:18-0800 1 183 101 {D3AC165E-D7C4-4BDF-83F0-E249ECBE873B} 101 0 AutomaticUpdates Success Content Install Installation Successful: Windows successfully installed the following update: Update for Windows XP (KB898461)
2006-01-31 09:56:10 2396 9e8 Handler Install completed with 0x80070005.
2006-01-31 09:56:10 2396 964 Handler FATAL: UH: 0x80070005: InstallOrUninstallThread failed
2006-01-31 09:56:10 2396 964 Handler : WARNING: Install completed: result type = 0x0, installer error = True, error = 0x80070005, disabled until reboot = Yes, reboot required = No
2006-01-31 09:56:10 2396 964 Handler FATAL: UH: 0x8024200b: HandleSingleUpdate failed
2006-01-31 09:56:10 2396 964 Handler :::::::::
2006-01-31 09:56:10 2396 964 Handler :: END :: Handler: Windows Patch Install
2006-01-31 09:56:10 2396 964 Handler :::::::::::::
2006-01-31 09:56:10 876 b08 AU >>## RESUMED ## AU: Installing update [UpdateId = {B166A6A9-398B-4C81-B8DB-2043CF0672A1}]
2006-01-31 09:56:10 876 b08 AU # WARNING: Install failed, error = 0x80070005
2006-01-31 09:56:10 876 6dc Agent *********
2006-01-31 09:56:10 876 6dc Agent ** END ** Agent: Installing updates [CallerId = AutomaticUpdates]
2006-01-31 09:56:10 876 6dc Agent *************
2006-01-31 09:56:10 876 b08 AU # Install call complete for all calls, reboot required = Yes
2006-01-31 09:56:10 876 b08 AU #########
2006-01-31 09:56:10 876 b08 AU ## END ## AU: Installing updates [CallId = {BC91BEFF-68DE-4E87-8D5E-79D973AB5C09}]
2006-01-31 09:56:10 876 b08 AU #############
2006-01-31 09:56:15 876 b08 Report REPORT EVENT: {CB70EA4D-10E1-4B66-9BCC-31BCD0D1D734} 2006-01-31 09:56:10-0800 1 182 101 {B166A6A9-398B-4C81-B8DB-2043CF0672A1} 103 80070005 AutomaticUpdates Failure Content Install Installation Failure: Windows failed to install the following update with error 0x80070005: Microsoft Windows Installer 3.1.
2006-01-31 09:56:15 876 b08 Report REPORT EVENT: {DA11A642-FA71-47E6-AFF5-AE3F7D8B46CF} 2006-01-31 09:56:10-0800 1 193 102 {00000000-0000-0000-0000-000000000000} 0 0 AutomaticUpdates Success Content Install Restart Required: To complete the installation of the following updates, the computer must be restarted. Until this computer has been restarted, Windows cannot search for or download new updates: - Update for Windows XP (KB898461) - Microsoft Windows Installer 3.1
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