Finally after almost two years of having my laptop, I solved the Windows Update error!!!

Ends up the TrustedInstaller.exe file was missing from C:\WINDOWS\servicing

If anyone else has the same problem as me and requires the TrustedInstaller.exe file you can download it here: http://rapidshare.com/#!download|137...staller.zip|21

I found the solution on this forum thread: http://www.techsupportforum.com/micr...w-updates.html