In case someone is struggling with WindowsUpdateProvider to install Windows Updates, there are at least two bugs in the provider code.
1. Download of updates is never called. Windows Update Agent API is used to search for updates and after search results are received, install method is called without downloading the updates first and of course update fails with error code "0x80246007 WU_E_DM_NOTDOWNLOADED The update has not been downloaded."
2. If reboot is required after installing windows updates, the code never calls SetComplete() to finish the update procedure. SetComplete() call should be moved outside catch block, because StopWebServicesCompleteCallback is the last step in the process.
You can use code from http://blogs.iis.net/gursing/archive/2010/09/06/how-to-write-a-web-farm-framework-provider.aspx to build your custom provider and fix those two bugs.
Br,
Aleks