Unable to activate windows update/install IE8

First off, thank you to whomever helps me work this out.

The problem: I have recently inherited a Eee PC c/XP sp3 and wanted to install Openoffice on it. Attempting to install open office triggered an error, which requested I update to the latest version of IE. Upon trying to activate windows update in order to install IE and any other necessary updates I run into a series of errors preventing me from activating it. I then tried to dwnld/install IE 8 from microsofts update page, which was on 50% successful. During the install I encounter a ieseptup.exe - Bad image error which reads:

The application or D:: C:\WINDOWS\System32\wuapi.dll is not a valid Windows image. Please check this against your installation diskette.

And that is where I am currently at.

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