Similar to the post by ClickStartComp 



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method used by Customer Support Services is to rename the folder. Verify that no problems exist after a restart and then delete the folder.
Here is a KB which in trying to fix another problem uses the process of renaming the folder:http://support.microsoft.com/kb/949386
Before your rename the folder you must stop the service. Here is how:
- Start>Run
- type cmd and press enter
- type net stop wuauserv and press enter
- type rename c:\windows\SoftwareDistribution softwaredistribution.oldand press enter
- type net start wuauserv and press enter
- type exit and press enter
Verify that the new software distribution folder created when you restart the update service is approxiamtely 1.5 MB in size (standard files). Restart the computer and del the folder if you have no issues.