Here is a comprehensive list of 12 methods: Unable to install updates in Windows Vista, Windows 7, Windows Server 2008 and Windows Server 2008 R2
The one that might work for you depends on nature of the problem in your system. None worked for me though (I have exactly same problem on my Windows 7 Home Premimum SP1 notebook).
I suspect that it is wups2.dll corruption issue in my case. It is of 0 byte. So I will have to go through factory restore route.
Few pointers from my experience:
* These services must be on every time: Windows Module Installer, BITS, Windows Update, Time sync.
* Pending.xml (Method # 11) solution must be last resort. It is strongly discouraged by MS support guy.