Ive been trying to update for what seems like the past month.

Please post the data from the Windows Update Posting Instructions

The SFC scan repaired a couple of things - but failed on one, think....

Code:

 Line 8671: 2013-01-30 21:56:04, Info                  CSI    00000300 [SR] Unable to complete Verify and Repair transaction because some of the files that need to be repaired are in use. A reboot is required to complete this operation.
 Line 8672: 2013-01-30 21:56:04, Info                  CSI    00000301 [SR] Repairing 3 components
 Line 8673: 2013-01-30 21:56:04, Info                  CSI    00000302 [SR] Beginning Verify and Repair transaction
 Line 8676: 2013-01-30 21:56:04, Info                  CSI    00000304 [SR] Cannot repair member file [l:20{10}]"authui.dll" of Microsoft-Windows-Authentication-AuthUI, Version = 6.1.7601.17514, pA = PROCESSOR_ARCHITECTURE_INTEL (0), Culture neutral, VersionScope = 1 nonSxS, PublicKeyToken = {l:8 b:31bf3856ad364e35}, Type neutral, TypeName neutral, PublicKey neutral in the store, hash mismatch
 Line 8677: 2013-01-30 21:56:04, Info                  CSI    00000305 [SR] Repaired file \SystemRoot\WinSxS\Manifests\\[l:20{10}]"authui.dll" by copying from backup
 Line 8680: 2013-01-30 21:56:04, Info                  CSI    00000307 [SR] Repairing corrupted file [ml:48{24},l:46{23}]"\??\C:\Windows\SysWOW64"\[l:20{10}]"authui.dll" from store
 Line 8683: 2013-01-30 21:56:05, Info                  CSI    00000309 [SR] Repairing corrupted file [ml:520{260},l:46{23}]"\??\C:\Windows\System32"\[l:20{10}]"authui.dll" from store
 Line 8686: 2013-01-30 21:56:05, Info                  CSI    0000030b [SR] Repairing corrupted file [ml:520{260},l:62{31}]"\??\C:\Windows\Branding\Basebrd"\[l:22{11}]"basebrd.dll" from store
 Line 8705: 2013-01-30 21:56:05, Info                  CSI    0000030e [SR] Repair complete
S

The CheckSUR report was clear.
I think I'd better ask for a new SFC /SCANNOW and CBS.log file before attempting to fix anything.
Please make sure that you reboot after the SFC scan, as that 'beds in' the changes and should be reported in the log.

Glad I asked for the retest - the error is no longer present :)
What happens now if you attempt Windows update
First manually do a Check for Updates
then try installing any updates available.
note any errors received, and which updates fail (if any), and post back with details.

Do you mean you were logging in using the old Win2k-style username and password box, or something different?

Usually, the trick is to remove the need to logon at all.

Shawn probably knows what you're talking about.....
but I see that you participated in this thread.. Removing Picture Frame On Startup/Login Screen which appears to deal with it??