Yes, I do recall seing similar error on a handful occasions in 2007-8. Back then they were mainly caused by missing updates and as far as I remember back then I was able to access Internet Options via Control Panel to fix the issue. This time I was unable not only to use Microsoft Update and IE at all, also Internet Options were not accessible at all.
I have uninstalled IE8, cleaned registry and temp files and re-installed IE after rebooting the system and now it works like a treat.
While the issue has been fixed, it's worth mentioning that after removing all trojans, malwares, spywares, tracking cookis and other garbage, and before getting an error messages from the system, I was able to use IE to download a bunch of updates. I will have a look at Event Viewer to see if the errors might have been caused by some recent updates, meanwhile I still have to finish the other updates, do some defrag etc to bring this dinosaur back to 'work' :)