XP comes to a complete standstill
I've seen this on numerous systems to more or less extent. It hits single core systems particularly hard because it drives up CPU usage to 100% the moment Windows Update starts checking to see if you need any updates. On one laptop, I had to reboot in Safe mode with the network cables unplugged to manage to get into Control Panel and turn off Automatic updates completely - after that; all was good.
Overtime, I guess as the number of available updates increases, the auto update feature seems to be getting slower and slower. I manually ran an update on another single core laptop the other day and it took well over 30mins @ 1.8Ghz just to figure out what I needed.
The effect is definitely less noticable on dual core desktops - but it's still painful.