So this was going a bit too easy. After installing a fresh copy of Windows XP, including SP2. I went to the update site which prompted me to install SP3, which I did. No problems so far, yet after the new service pack being deployed to the system windows update refused to install any further updates. It found, listed and downloaded them fine but every installation failed. Long story short, if you’re in this situation open up a command prompt. Click start, run, type in cmd and then click ok. In the command prompt type in regsvr32 %windir%system32wups2.dll and hit enter, this registers that dll. Go to the windows update site now, and you’ll have no problems.
If you have xp 64 the dll is located here: %windir%syswow64wups2.dll.
This was after I tried my earlier solution which you can find here.