You might wanna try
System File Check. With no other apps running, particularly any real-time monitoring/protecting apps, such as antivirus or antispyware, go to Start>Run, type (without the quotes) "
sfc /scannnow" (note the space between "
sfc and "
/scannow", and note also the forward slash (
/) and the 2 "
n"s in "
/sca
nnow"), click "OK". A progress box should appear. During the process, you may be asked to insert your Win2K installation disk, so have one handy (a vendor's "Restore" disk won't work, but alternately, any W2K install disk will - and actually, all that's needed is the I386 file from the install disk, which can be copied from any Win2K install disk, even a "Restore" disk, placed in a folder on your machine, and targeted manually when you are prompted for your install disk). When the process has completed, reboot, connect to the internet, and see if Windows Update now works.
It is possible also your SP4 update did not install properly. You should be able to locate and uninstall it via Add/Remove Programs. Following the uninstall, reboot, connect to the internet, and, with no real-time monitoring/protecting apps running, go to Windows Update and see if you can reintall the Service Pack.
Also, see Microsoft:
Software updates for some Windows components may not be applied when you install a service pack for Windows 2000, for Windows XP, or for Windows Server 2003
and
You cannot install some updates or programs
Both articles include links to further troubleshooting tips and possible resolutions for the problem you describe.
Edit to add an afterthought:
A couple more potentially hel;pful ideas:
Microsoft Baseline Security Analyzer v2.0 may assist you in tracking down and fixing the problem too, I'd certainly give it a shot before descending into despair.
And there's always manual updating: Microsoft:
How to download Windows updates and drivers from the Windows Update Catalog - which frankly is my preference - I like to download-and-save a copy of the update or patch whenever possible, and install it on my own terms. While I recommend Automatic Updates for most users, I don't use it myself; I stay abreast of what has been released, and go get it myself - often before it would turn up via Automatic Updates.
And of course, if all else fails, there's always panic, anguish, despair, and reformatting/re-installing Windows