Error 1406 and Windows Update does not work

I have a customer with a Windows XP SP3 system hooked to a Windows 2003 Server.  The user is setup as an Administrator on their system.  They had said they could not download any Windows updates without an error coming up and then they tried to install some software today and it come up with an Error 1406 - Could not write value to key /software/classes/.xml - not sure if the two are connected but need to fix.  Thanks.
Daren Anderson, MSISPresidentAsked:
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SISAntCommented:
I'd lean towards two things, Registry corruption meaning you've lost the user permissions to access the key properly. try opening REGEDIT and browsing to it.

or MSI corruption in which case you need to go to the microsoft website and download the newest one or run a SFC /scannow at the CMD line and see if that fixes any corruption.

Whilst I cannot give that this is a guaranteed fix, these are my first two instincts and the first two things I would check if a client had come to me with this issue.
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DonNetwork AdministratorCommented:
Check if this applies

http://support.microsoft.com/kb/838687


Are they using adminstrative privileges ?? <<<enable "Allow non-admins to recieve update notifications"

Have you tried resetting windows update components ?

http://support.microsoft.com/kb/971058
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Daren Anderson, MSISPresidentAuthor Commented:
I have tried the sfc /scannow as well as the microsof fixit above with default/then aggresive, tried the software again but same problem.  Then I tried the Windows update and get the following error, which I was getting before:  [Error number: 0x80070005
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DonNetwork AdministratorCommented:
Use subinacl to reset the registry permissions and try again


http://blogs.msdn.com/b/astebner/archive/2006/09/04/739820.aspx
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Daren Anderson, MSISPresidentAuthor Commented:
I used this and it went thru the complete reset but I still have the issues...what is there something I didnt do?
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DonNetwork AdministratorCommented:
could you post the windowsupdate.log ?
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Daren Anderson, MSISPresidentAuthor Commented:
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DonNetwork AdministratorCommented:
Ok

First try installing the latest windows update agent >>>you may need to use the switches  /quiet /norestart /wuforce

http://technet.microsoft.com/en-us/library/bb932139.aspx


then maybe

http://support.microsoft.com/kb/883825
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Daren Anderson, MSISPresidentAuthor Commented:
Not sure what I did but I got the Windows update to run and was able to download 47 updates but now it will not install IE8 or any of the other updates - it says failed.  Also when I tried to install that other program, I get a the windows installer could not be accessed.  Thoughts?
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DonNetwork AdministratorCommented:
2 thoughts

Run a scan with malwarebytes

http://www.malwarebytes.org/mbam.php

and/or hitman pro

http://www.surfright.nl/en

then

http://support.microsoft.com/kb/315346
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DonNetwork AdministratorCommented:
Also have you tried using a different user ?
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Daren Anderson, MSISPresidentAuthor Commented:
I did try a different user, same issue.  I had checked the system with Malware Bytes before but then used ComboFix and did a few more things and finally got everything to work - thanks for all your help.
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DonNetwork AdministratorCommented:
Was a stubborn one :)
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