Yeah, its really annoying that Windows Update requires those services. Here's what to do:
Click Start > Run... then type services.msc into the box, and click OK. The services window should now be open. Look down the list, and find Automatic Updates. Right-click on it, select properties, and then set the startup type to Automatic. Do the same for the Background Intelligent Transfer Service and also the Event Log service. You can disable all three of these services (if you wish to do so) after you get your updates. Of course you'll need to re-enable them if you want to check for updates again later ;)
Let us know if it works now :D
P.S I've also heard that you need to have the Cryptographic Service running in order to use Windows Update. Try it and see if it makes a difference.