If you use a proxy server on your network you can sometimes find the Automatic Updates via the scheduled Windows Update feature do not work.

You would expect that Windows Update would pick up your Proxy Settings from Internet Explorer, but it doesn't happen. The Windows Update Client runs as a system service and doesn't have the ability to look at User Settings (like those in IE), when run automatically. When you manually go to Windows Update it works because you initiate the Updates from Internet Explorer and that has properly configured proxy server entries.

Thus you need to add a proxy Server entry for the Windows Update Client.

See this Microsoft Knowledge base article for more info.

To simply copy your user proxy settings ( in IE )

proxycfg -u

To add a Proxy Server for Windows Update

At the command prompt, type proxycfg -p <proxyserver>:<proxyport> and then press ENTER. 

where proxyserver is the name of your proxy server, or IP Address if you dont use DNS and proxy port is the port the proxy listens on for connections.

For example a squid proxy running on port 3128 with the dns name of "proxy" would require the following....

proxycfg -p proxy:3128

if you make a mistake you can remove the entry with...

proxycfg -D and press enter.