interesting credentials problem

[TJM4FUN]

Well, I think it is finally time for either a reinstall or a repair install, but I'll work on this a while longer.
XP pro, sp2.
A couple of utils I d/l'd seem to not work, reading on their forum it is due to some issue with .net being downlevel.
Ok, no biggie, haven't updated this for a long time, so I fire up windows update. it promptly pukes when it tries to level check. so I follow their kb info, and now things get interesting. User rights are set properly, sec pol is correct, so next is to run a command to set credentials. it fails. acces is denied, error 5. hmmmm
So I go off to services and check rpc is set properly, it wasn;t so I fixed that, and scrolled to the update service, strange, no status. try to click on it, I get an error:
Unable to open service Automatic Updates for reading on Local Computer.
Error 5 : Access is denied.

Now off to search on that, ms has nothing, and I cannot find any references to specific services in the various policy editors.
This is really a completely new failure to me, so figured I'd see if anyone else ever had something like this.