First it would be good to prevent the "Automatic Update" service from
running and see your machine working properly. Aftewards you can
troubleshoot while the svchost.exe (Service Host) which 'hosts' the Automatic
Update service along with other crucial services that you see failing.
Do this by following Method 2 documented in ths article.
Be sure to manually download the updates as well.
If Method 2 doesn't prevent the svchost.exe application error then do the
following to prevent the AUtomatic Update service from starting.
Set the Automatic Updates to Manual
start / Right Click My Computer / Click Manage
Expand Services and Applications
Double Click Services
Sort by Name and find Automatic Updates and double click it
Set the Start type to Disabled
Reboot and confirm your machine isn't experiencing the svchost.exe
application error and manually update your computer.
Now follow the Steps 1 and 2 in the above mentioned article.
Test the operation before resorting to Step 3 which basically cleans out