Windows 7 Automatic Updates Disabled by Administrator

Unable to configure automatic updates on this Windows 7 Pro 64bit - workgroup (read: non-domain) machine:
Control Panel > Windows Update > Change Settings
Under "Important Updates", the drop-down menu for automatic updates is set to: "Never Check for Updates (Not Recommended)" and is grayed out, cannot be changed. Top of window reads "Some settings are managed by your system administrator." Windows Updates works properly when initiated manually, so the system is up to date.

I am attempting to change these settings from an administrator account. I've attempted to create a new local administrator account and found the same results.

Local group policy setting for "Remove access to use all Windows Update Features" is set to "disabled".
BITS, Cryptographic services, and Windows Update services are all set to "Automatic".

HKEY_LOCAL_MACHINE\Software\Policies\Microsoft\Windows\WindowsUpdate permissions AND
HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Windows\CurrentVersion\WindowsUpdate
set to "Full Control" and "Read" for Administrators group.

Malware scans unremarkable, running Microsoft Security Essentials on this machine.

Any advice to get this setting changed would be greatly appreciated and welcomed. Thanks!
Chris NalberczinskiAsked:
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Neil RussellTechnical Development LeadCommented:
Has it ever been on a domain and removed?
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JohnBusiness Consultant (Owner)Commented:
Did you set some local policies on this computer to stop updates?  That is the only way I know to grey out Updates.

Try running System File Checker to see if it can correct the problem. Open an admin command prompt and run SFC /SCANNOW twice. Allow to complete, restart and test.
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Michael-BestCommented:
See this guide titled: Windows 7: Windows Update - Enable or Disable "Who can install updates" Setting by: sevenforums.com

Link:
http://www.sevenforums.com/tutorials/112765-windows-update-enable-disable-who-can-install-updates-setting.html
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Chris NalberczinskiAuthor Commented:
System may have been on a domain at one point, but I'm not sure... any way to verify?

sfc /scannow got to 36% and failed "Windows Resource Protection could not perform the requested operation."
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JohnBusiness Consultant (Owner)Commented:
You may need to try a Windows 7 Repair Install. You need the Windows 7 DVD to do this. There is a Seven Forums Tutorial you may be able to find. I will post a link when I get  back my computer.
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Chris NalberczinskiAuthor Commented:
I'm familiar with the process - I'll give it a shot.
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Michael-BestCommented:
If you need to repair or re-install  win. 7 , then see this guide by: wikihow.com/Reinstall-Windows-7

Link:
http://www.wikihow.com/Reinstall-Windows-7
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QlemoBatchelor, Developer and EE Topic AdvisorCommented:
I would try to rename the HKLM\Software\Policies\Microsoft\Windows\WindowsUpdate regkey (I usually prefix a minus, to make it obvious and reversible). That should disable all policies, and only make the current AU settings in HKLM\SOFTWARE\Microsoft\Windows\CurrentVersion\WindowsUpdate active.
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Chris NalberczinskiAuthor Commented:
Thanks Olemo for pointing me to the answer - appears that someone added a NoAutoUpdate=1 value to HKLM\Software\Policies\Microsoft\Windows\WindowsUpdate. Once I deleted it, all was well with the world.
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