I tried your suggestion, and it did the same thing. As soon as I click on "install updates automatically" and click on 'ok' (after following your steps for never checking, etc)
it starts checking, I can't check manually, then it goes to the 80080005 error, I really can't tell you at what point in the process, since it appears that it is checking for the updates. the horizontal bar appears, with the green bar that moves across the screen. I don't know if it matters, but, all the boxes are 'ticked' under the windows update page. (Where I select to install updates automatically, download updates but let me choose, etc).. The boxes underneath that are ticked are:
Who can install updates
I hope this makes sense.