Today one of my colleagues was trying to create an image of one of our new Dell machines whilst in the process he tried to use Windows Update and was instead redirected to http://support.microsoft.com/kb/2497281. Frustrated, we tried a different proxy server and at first thought it was WSUS causing the issue. Windows Update worked on other PCs no problems.
So we did some research on the Interweb and noticed a few posts by similiar people having the same issue. Seems to have happened over the last week by the sounds of it, have Microsoft broke something?
The fix is to either reinstall Service Pack 3 which is time consuming or obtain the latest Windows Update Agent 3.0 from http://support.microsoft.com/kb/949104 which will resolve the issue.