|"A common issue, IMO, is that Windows updates driver files for hardware. This can cause problems."|
Automatic Update does not install updated hardware drivers from what I've seen, but they are sometimes available when you go to the Microsoft Update page and select a Custom search.
When they were available for my case, some of the ones I allowed to be updated did not work properly (dial-up modem drivers, ATI video drivers, etc., ) , so now I don't download them from there and have it install them . If there are driver updates listed, I use that only as information - if I want them I get them from the source rather than from there.
However, software updates installed by Automatic Update could possibly cause a problem.