Ramesh, thank you for your reply. I took the time today to go through everything, here are the results:
M1 1) "fix it" - no change.
M1 2) "windows update troubleshooter" - some items fixed, some not, pdf: windows_update_troubleshooter_20140329, in this link:
http://comrace.ca/temp/windows_update_troubleshooter_20140329.pdf
M2 did a clean boot; re-ran "fix it" - no change. re-ran "win update troubleshooter", some items marked fixed, some not, pdf: windows_update_troubleshooter_20140329_clean_boot, in this link:
http://comrace.ca/temp/windows_update_troubleshooter_20140329_clean_boot.pdf
returned to normal boot.
M3 do the steps in "Unable to install updates in Windows Vista, Windows 7" (http://support.microsoft.com/kb/2509997/en-us)
1- not applicable
2-checksur: "installation complete" (installed some hotfix, didn't get the number), then tried windows update: same error (80073712); log is "CbsPersist_20140329205819.cab" in this link:
http://comrace.ca/temp/CbsPersist_20140329205819.cab
3-sfc /scannow - as before, would not run
4-reset catroot2, retry windows update, no change.
5-remove incorrect registry values; none exist to remove.
6-register the windows update files; no error messages from registration; retry windows update, same error.
7-antivirus - I use ms security essentials, so this is not an issue
8-rename software distribution folder; did the commands, retry windows update, same error
9-bits queue; did the commands, retry windows update, same error.
10-manuall install, 958056 update; did "review update history", which is empty except for "You have not tried to install any updates for your computer". So I could not complete method 10.
11-rename pending.xml - did the "takeown" command, "ERROR: The system cannot find the file specified." - so I could not complete method 11
12-chkdsk on windows partition - did the command (needed to reboot to do the chkdsk); nothing material appeared; retried windows update, same error.
So.. any further suggestions?