Microsoft support had me do the following, which seems to have solved the problem. Presumably there are some inappropriate policies set in the drive image Dell used to install Windows 7.   Remove Group Policy ================ Before we proceed, please backup the Registry. 1. Click Start, type REGEDIT in the Start Search bar and press Enter. 2. Select My Computer (the root node) in the left pane, click Export under the File menu, choose All under Export range, select Desktop in the Save in box and type backup in File Name. Click Save. Please Note: The backup file is on the Desktop and named backup.reg. We can simply restore the registry by double-clicking the backup.reg file. 1. Click Start, type REGEDIT in the Start Search bar and press Enter. 2. Locate the following key in the left pane: [HKEY_LOCAL_MACHINE\Software\Policies\Microsoft] 3. Highlight “Microsoft” folder and click "Delete". 4. Please repeat to delete the following keys: [HKEY_LOCAL_MACHINE\Software\Microsoft\Windows\CurrentVersion\Policies [HKEY_LOCAL_MACHINE\Software\Microsoft\Windows\CurrentVersion\Group Policy] [HKEY_CURRENT_USER\Software\Policies\Microsoft] [HKEY_CURRENT_USER\Software\Microsoft\Windows\CurrentVersion\Group Policy] [HKEY_CURRENT_USER\Software\Microsoft\Windows\CurrentVersion\Policies Note: If some keys do not exist, please ignore them. 5. Restart the computer and check if the issue persists.  
Windows Update failing in Windows 7