The fix listed above for the KB954430 issue is needed every time AC v5 is uninstalled and reinstalled from scratch. Once kb954430 has been repaired by first deleting the offending 2001 msxml4.dll and msxml4r.dll files from the system32 folder and running the .net4 SP2 installer (msxml4-KB954430-enu.exe) again and using its repair mode, windows update will work again.
There are several more high updates to .net4 subsequent to the kb954430 (2008) version. These include the high priority <<Update for Microsoft XML Core Services 4.0 Service Pack 2 (KB973688)>> (7/21/2009) and the optional <<Update for Microsoft .NET Framework 4 on Windows XP, Windows Server 2003, Windows Vista, Windows 7, Windows Server 2008 x86 (KB2468871)>>.
There is now a new one ? the optional <<Update for Microsoft .NET Framework 4 on Windows XP, Windows Server 2003, Windows Vista, Windows 7, Windows Server 2008 x86 (KB2533523)>>. So far, this last one (
http://support.microsoft.com/kb/2533523) also fails to install ? there appear to be many people having trouble with it.
Hockeyref's comments are well taken - the patch installs are slow and the whole process can take over an hour for one machine. Going around the horn in a row boat is no fun.
The problem is caused by the .NET package included in the original SQL Server 2005 distributable that is installed by the AC installer; it does not detect an up to date .net 4 sp2 installation and installs the older version over it, making a mess. This whole story - the bad behaviour and the fix - has been confirmed and reconfirmed.
