Bob --
If you are using AOL as your ISP, you need to minimize your
AOL browser and launch Internet Explorer, then visit the Windows
Update web site while using Internet Explorer.
Try the following solution from the Windows Update Troubleshooter:
http://v4.windowsupdate.microsoft.com/troubleshoot/
Select:
"Problem Downloading/Installing a Software (Non-Driver) item"
Follow steps under:
"Install stops at 0% when using the AOL Browser"
While using the Internet Explorer browser, try downloading
the updates again:
http://v4.windowsupdate.microsoft.com/en/default.asp
Visit this web site if you still experience difficulty installing
updates:
How To Fix The Cryptographic Service Error
http://www.updatexp.com/cryptographic-service.html
****ALTERNATIVE****
I would recommend downloading and installing SP1 directly
from the following web site, instead of downloading it from
the Windows Update web site.
Windows XP Service Pack 1 (direct download)
http://www.microsoft.com/WindowsXP/pro/downloads/servicepacks/sp1/default..asp
Note: Select "Network Installation" (32-bit)
P.S. Make sure to disable your antivirus program and close any
open programs before installing it.