I must admit that I am stumped.Short off doing a system recovery,using the disc,I have no idea.I have never seen this problem before..one possible way is to get someone who understands the registry and get them to help you add the AUState and set it to is 2

Richard:

have you tried logging in as admin in safe mode and setting your auto updates that way? give that a shot and let us know.

the registry entries look fine, I wouldn't worry about those quite yet. We will if we have to, but let's try the simple stuff first.

thanks,
v