Regardless what its purpose is..

This is the same as buying a car, then the dealer still has access to modify the content of the vehicle, while you sleep in peace knowing your car is locked (you chose to lock to prevent the dealer or anyone getting in).

The point is simple here, if Windows are set to NOT to update, then NOTHING should be updated without you knowing, regardless what reasons or excuses Microsoft comes up with.

Looking it from a hackers point of view, this will translate to them able to inject modules into your PC even though Windows are set not to accept any updates, all without you knowing, this sounds dangerous for many users, if MS can inject the update code without the user knowing, hackers can do the same, this Windows so called security/registration is turning into a bad practice, very soon, Microsoft will be able to pop up on your screen to remind you to upgrade to Vista every 5 mins until you buy a copy, all this while your PC are set not to accept junk popups .