WSUS not working on SBS with Sharepoint installed

Hi
I am trying to make WSUS work on SBS for a couple of days now. The clients are simply not reporting to the WSUS server and selfupdate is not working. There is no firewall involved, I dont have ISA, all clients are XP SP2.  This is a simple setup one SBS, one switch and five XP SP2 boxes.
The diagnostic tools for the client returned all OK and somd None.

The client side error is:
Unable to Connect: Windows is unable to connect to the automatic updates service and therefore cannot download and install updates according to the set schedule. Windows will continue to try to establish a connection.

The server side error is:

Many client computers have not reported back to the server in the last 30 days. 5 have been detected so far.

and another server side error:


Description:
Self-update is not working.

I did try the steps on:
http://technet2.microsoft.com/WindowsServer/en/library/b23562a8-1a97-45c0-833e-084cd463d0371033.mspx?mfr=true

and to my knowledge they did work all, in particular

Check for the selfupdate tree on the WSUS server -> Executed Successfully

And I could download and view the CAB files using IE on the client. http://WSUSServerName/iuident.cab

However

If you have installed Windows® SharePoint® Services on the default Web site in IIS, configure it to not interfere with Self-update

Did not work because when I reach

1.
 Open the Windows Sharepoint Services Central Administration Site (click Start, point to Administrative Tools, and then click Sharepoint Central Administration).
 
2.
 Click Virtual Server Configuration, and then click Configure Virtual Server Settings.
 
3.
 Click Default Web Site.
 
The status of default web site is

Default Web Site http://xyz  5.0.2.6790 Upgrade

So when I do click on it it simply open a small popup box.

Any hints here ?

Note: Please dont just post links, I need constructive advice.








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