BSOD Windows Update error 0x80070003

I ran Memtest86 for 10 hours - more than 8 passes - about a week ago and there were no errors but I will do so again tonight and post later.

Did you run MemTest86 or MemTest86+?

memtest86+ v.501

Okay then, run Furmark. If the temps goes too high stop the test. Video Card - Stress Test with Furmark

EDIT: Can you re-install MSE?

I ran MemTest86+ for another 8 passes - no errors.
I ran Furmark for 20 minutes - no problems.
Uninstalled and reinstalled MSE and ran a quick scan - no issues.

Run Prime95, if the temps goes too high stop it. Hardware - Stress Test With Prime95

We currently have 3 suspects, the CPU, PSU and the motherboard.

I'm not sure how long to run Prime95 but it has been running now for 2-3 hours and every test has passed.
I guess that leaves the PSU and mobo.
It does seem strange to me however that the BSOD only occurs when I run Windows Update. I have not had a single BSOD after switching off automatic Windows Updates.

Hmm, now that you say that. I think now the culprit is a corrupted install of Windows. But as you re-installed Windows multiple times it can't be. Can you borrow a friends motherboard and see if it works without BSODs?

I didn't reinstall Windows I did a backup recovery using the Windows Install disc. I had a system image from a week before the Windows updates. I assume this is different from a Windows reinstall?

It basically is an re-install. But can you borrow another motherboard?