I had this issue on windows 7 and your 2-part solution finally solved it.
Yesterday I had left the windows update window running for many hours, and when I looked at it later the progress bar was gone and it showed this:
Code 80072EE2 Windows Update encountered an unknown error
WindowsUpdate_80072EE2 WindowsUpdate_dt000
My windows update log from a few minutes ago had this, with timestamps starting about an hour ago:
~ 23:31:40 ~
416 fa0 PT +++++PT: Synchronizing server updates ++++
416 fa0 PT + ServiceId = {blah} Server URL = https://www.update.microsoft.com/v6/ClientWebService/client.asmx
416 fa0 PT WARNING: PopulateDataStore failed: 0x80248007
416 fa0 PT WARNING: Sync of Updates: 0x80248007
416 fa0 PT WARNING: SyncServerUpdatesInternal failed: 0x80248007
416 fa0 Agent *WARNING: Failed to synchronize, error = 0x80248007
416 fa0 Agent * WARNING: Exit code = 0x80248007
416 fa0 Agent ** END ** Agent: Finding updates [CallerID = AutomaticUpdates]
...
416 fa0 Agent WARNING WU client failed searching for update with error 0x80248007
416 d1c AU RESUMED AU: Search for updates [.CallID = ...]
416 d1c AU WARNING: Search callback failed, result = 0x80248007
416 d1c AU WARNING: Failed to find updates with error code 80248007
416 d1c AU END AU: Search for updates [CallID = ...
416 d1c AU Successfully wrote event for AU health state
416 d1c AU setting next detection timeout to 2012-03-04 04:31:50
(note that's +5 hours from the current time)
(that's just from the log that happened to be in c:\windows\ after I fixed it 20 minutes later using the net stop three services, rename the 2 dirs, net start three services
Searching for "windows update hangs on checking for updates" or "windows update checking for updates forever" gets a lot of replies, from answers.microsoft.com to sevenforums and beyond.
Prior suggestions I tried were:
Use the microsoft fixit for windows update components ( http://support.microsoft.com/kb/971058 ): didn't solve it. Fixit said there were no detected problems even though the detection details noted that windows couldn't connect to the update server.
What a joke.
Using msconfig to disable microsoft modules update and reboot... didn't fix it.
(Suggested as a solution by AddisonSnell on feb 9, after he had the problem)
A few people said their virtual machine software was causing problems; I temporarily removed virtualbox and that didn't fix it.
Some people said to repair the windows install from install media. The last thing I want to do is have to reinstall all the windows updates. My install media is win7 original (sp0), not sp1.
Then there were the people who suggested contacting microsoft tech support... that's a non-answer.
Can you please petition Microsoft to get all the responses to this question in one place and formalize it?
And you wonder why people hate windows? This kind of experience with a core necessity -- windows update failing to work -- does not leave a good impression.
Windows update should not fail in multiple ways with no useful diagnostic error messages. This behavior should be considered a bug and fixed immediately.
Of course, this is classic windows behavior... mysterious failures and unhelpful error codes that you can try to search for, but MS KB entries and answers.microsoft.com rarely provide solutions. It ends up being a maze, trying one suggestion after another,
with most either failing to work or being overkill (repair from install media? REALLY? I don't think so...)
Based on your solution, I assume that the state of files in those two directories was corrupted somehow. If I need to email those saved .old dirs and the update log I have to someone official at ms, let me know.