WindowsUpdate causes some trouble for me from time to time, but nothing like this. Just for the heck of it, run chkdsk, but do it from the command prompt. The GUI version of chkdsk is completely braindead and will actually IGNORE critical errors if it doesn't have exclusive access to the drive (and it never does, because of how Win2K works).
SP2 gave me a lot of problems with my nForce2/Athlon, which were fixed with SP3. I've been using SP4 with a P4 for a while, and haven't had too much trouble. The only thing I know is that the newest nVidia Detonator drivers have BIG problems with causing a BSOD and other random resets. I downgraded my nVidia drivers and so far all has been good.
