This one had me going for a while. A new build, clean as a whistle and suddenly the windows updates seemed to be going haywire.

Symptoms: Message configuring updates on start up which takes forever... sometimes restarting in the middle of it and gets to configuring updates. Eventually it allows you to login.

Windows updates (on automatic) attempt reinstallation and this update requires a reboot. The restart message is missed because you are doing something else and suddenly the machine shuts down and starts the configuring update cycle all over again.

Just before you throw the machine out of the window....

To prevent the update installing automatically while you sort out the problem:
1. click Windows button
2. click control panel
(click security if you have a list of topics rather than icons)
3. click windows updates
4. on the left click change settings
5. click the radio button (the small circle) next to download updates but let me choose when to install them.

A quick Google later, I found that lots of people were having the same problem. The update is apparently for Bitlocker (TPM), but according to a Microsoft Moderator at Technet, it's much more important - even if you don't use Bitlocker at the moment....

I wanted to clarify one thing; the KB935509 is not a fix for the BitLocker code or feature. It is an update to the bootloader itself, which is necessary just in case you have a partition encrypted with BitLocker. If you have a partition encrypted with BitLocerk, and installed the next pre-req or the SP itself, it would have resulted in losing access to that partition and your data. This update handles keeping access to the partition when installing other core system updates.
(See link below)

In other words, when Service Pack 1 comes out for Vista (or other updates), and you subsequently decide to use BitLocker, you would lose access to the encrypted partition and therefore your carefully encrypted data.

But what if you don't have a TPM chip, so you can never use BitLocker?
Good question... given that the update is a bootloader update, it is probably wise to make sure it installs. I have however, asked the question and I will update this thread when I get an answer.

Of all the threads about this problem, this was the most helpful

If you would like to read what I did I have posted at length there... if you are impatient and just want to know how to fix this problem then:

1. Click the windows button, in the search box type
system configuration
2. On the boot tab, check the radio button for safe mode.
3. Apply and OK
4. DO NOT RESTART as requested - click restart later.
5. Go to control panel, system and maintenance
6. Click on System Protection on the left
7. Uncheck all the drives
8. Confirm you want to turn off system restore.
9. Go to control panel, windows updates
10. View Updates
11. Uncheck all updates except KB935509
12. Install selected updates
13. When it has installed, click the restart message and let the computer restart.
14. When it restarts, it will restart into safe mode (having first shown the configuring updates message).
15. Logon to your account
16. Click the windows button and type in System configuration in the search box again
17. Select boot tab and change it back to where it was (normal)
18. Apply and ok and allow restart by clicking restart button that comes up.
19. When the computer starts up again it should be in normal mode and you may get a message that Vista has blocked a start up item (right) click on the icon below the message and select run blocked startup item. It is just the system configuration message about having altered the system configuration.
20. Check the box on the system configuration message to never show this again (don't worry it will the next time you use system configuration).
21. Go back to control panel, windows updates and on the left, check view update history
22. KB935509 should now be showing as successfully installed.
23. Go back to control panel, system and maintenance, system protection and turn on system restore.

24. Post whether this worked for you or not please!