mikejm, you should check whether your firewall is blocking SVCHOST from accessing the internet. You should un-block svchost service from your firewall in order for Windows Update to work.
nanosani
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mikejm, which firewall are you using? Disable the firewall and then try to do it. If it works, then surely it's the firewall that's the culprit. You can do the following:
If it is Windows Firewall then you can go to Control Panel --> Windows Firewall --> Exceptions and add svchost to the exception list.
svchost is located in C:\Windows\System32\svchost.exe
Usually Windows firewall does not block Microsoft's own services. So I suppose you're using a 3rd party firewall.
If you are using any other firewall, you can add the same exe file to the exception list.
nanosani
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