Not updating your system leaves you wide open to possible attacks.
Protecting you against these attacks is the reason most of the updates are made available in the first place.
It's your computer and your choice but updating your system is just as important as updating your Security Software.
Well, I guess I should have phrased that better. I USED to upgrade Windows stuff (except to SP2 because I heard so many people were having problems with their systems crashing and such), until I had the issue that this thread turned into, about certain things not working right. That included IE, and Windows Update, which wouldn't work at all. (When you select "Windows Update" it automatically goes to IE, even if you have another browser set as your default. Since my IE wasn't working correctly, Windows Update wouldn't work.) Never upgraded to SP2 because of the fear factor AT THAT TIME, haven't upgraded any Windows items in the last year and a half because it wouldn't work.
To be honest, back when I could update, I never thought it was that important, and manually did it whenever I thought about it. I figured if everything was working okay, I had a firewall, and AV, did periodic scans--what was the point, especially if it might cause problems I'd have to deal with, and me not having a lot of computer experience to fix things when they mess up. I've changed my mind on this now, though. (I don't like having anything on automatic update except for AV resident, unless it let's me know what it's getting ready to update and I can choose whether I want it or not.)
After I do this disk clean and defrag sawduster suggested, I plan on seeing if update works.