I just noticed today that my windows updates were failing with the above error, I groaned of course as windows update issues are usually a royal pain in the ass to trouble shoot.
I checked my event log and also found this error.
The Background Intelligent Transfer Service service terminated with service-specific error %%-2147024891
I then checked under services and found that that the "Background Intelligent Transfer Service" was stopped and would not start.
A bit of googling told me that windows update relies on BITS to work. I found all kinds of suggestions and fixes, none of which worked. After a bit of probing how windows updates works I eventually discovered that the culprit was the downloader folder "C:\ProgramData\Application Data\Microsoft\Network\Downloader".
Simply deleting this folder allowed BITS to start and windows update to run.
This is on windows 7, on windows xp I believe this folder is inside "c:\documents and settings" somewhere.
I hope this helps a few other who may have this issue.
Dec 14, 2011 at 3:58 PM Solved my problem of Windows Update not working on Windows 7, thanks!
Sep 18, 2012 at 6:12 PM what process or service do I need to stop in order to be able to delete this folder?
Sep 18, 2012 at 6:44 PM "Background Intelligent Transfer Service"
Jul 22, 2013 at 10:19 AM Just used this to troubleshoot on a Windows Server 2012 VM, same issue sorted.