Just a WAG but ...

Check your windows\inf folder (a hidden system folder and you will have to
enable the viewing of such files and folders in Explorer (Tools | Folder
Options | View and check "Show hidden files and folders" and uncheck "Hide
protected operating system files") and look for large numbers of oem*.inf
files that are all 0 bytes in size.  If you've got thousands of such files
this is the cause of your problem as you're probably at the limit of the
number of entries that can be entered in a FAT folder and therefore cannot add
any inf file associated with the update.  Delete these 0 byte oem*.inf files.

Why has this happened?  If you have Norton's System Doctor installed did you
perhaps forget to disable System Doctor before updating your system from the
Windows Update site?  If you don't delete these files some software and most
hardware and driver installs will take a very long time to complete if they
complete at all.

For more details see the Symantec site:
http://service1.symantec.com/SUPPORT/nunt.nsf/docid/2000120915010309&src=n and
also MS KB 281967 - "Computer Stops Responding (Hangs) During Setup,
Installing Updates, or Adding New Hardware"
(http://support.microsoft.com/?kbid=281967).  I would strongly recommend that
you contact Microsoft and mention 281967 and also 301540 and ask for a copy of
the new ifsmgr.vxd v4.90.3003.  You will then either be sent the file or told
how and where to download a copy.  There should be no charge for this call
other than for the cost of the phone call.  Alternatively do yourself and your
PC a favour and dump System Doctor.
--
Mike Maltby
mcmaltby@hotmail.com