I fixed the WU/svchost problem by installing IE8 and KB289878. I can now download updates without svchost going into meltdown which is welcome. Up until now I always had IE6 as a secondary browser to run some legacy software I use from time to time. IE8 doesn't run well on this old box and it doesn't display pages properly when using the legacy software. Is there any way I can revert back to IE6 without breaking Windows Update?
I think you can have one or the other, just not both. So you can fix the svchost.exe and cure the meltdown or you can leave it so the old software you use works. Perhaps you need to play with IE8 settings to have it run in compatibility view settings. I myself have not used IE for years as main browser either.
someone mentioned a fix from safemode no net and installing ms installer 3.1 then the one from the site mentioned above. maybe with a prog called dial a fix, buggy but sometimes worked for me
Thank you for your reply f33nix. I have some good news to report, it turns out I can have my cake and eat it. Using a netbook with XP SP3 and IE6 installed and windows updates turned off I downloaded and installed KB2898785. After restarting the netbook I turned on windows updates back on and typed wuauclt.exe /detectnow to check for updates. After a very brief spike from svchost/wuauclt I had a list of updates to download and install. So it appears Microsoft have fixed the problem (for now). I just need to restore a drive image on the PC I run legacy software prior to the recent IE8 install to check it works too.
I'm afraid it's a new bug with XP Windows Update. Even XP with 2013 updates had the same problem, where it stays at the "Checking for the latest updates for your computer" screen with that animation forever. (BTW, reminds me of web sites that just show a loading animation forever because of NoScript blocking a script.) And it looks like this time, Microsoft is covering it up.
Happy to help. Today I restored the backup image on my "legacy" PC (which uses IE6) and installed KB2898785. Windows successfully detected the latest batch of updates without a hitch.