Automatic Update Greyed Out

You need to log into the pc's as a local administrator to be able to make the changes to those configurations. Or if there is a group policy in effect on the network, you may need to log into those pcs as a network admin. We have wrote a group policy to stop automatic updates on all our pcs in our network (approx. 300 - 400) with successful results. Hope this helps. :-)

1) Make sure that the Automatic updates and the BITS service in the services.msc
window are set to automatic and are started .

2) Check the registry key for permissions

1.Click Start, Run and type REGEDIT
2.Navigate to this location: HKEY_LOCAL_MACHINE \ SOFTWARE \ Policies \ Microsoft \
Windows \ WindowsUpdate \ AU
In the right-pane, look for a value called NoAutoUpdate
Check for its value, if the value is set to 1, then right click on NoAutoupdates
and select modify and change the value to 0 and click ok
Close the registry editor and restart the computer Then open system properties and
check the Automatic Update options it will be enabled

Symptom
When you open the Automatic Updates tab in My Computer Property sheet, or from Control Panel, all of the Automatic Updates configuration options may be grayed out. This happens due to any of the following reasons:

You're not logged on as Administrator (or equivalent)

Automatic Updates Policy is enabled

Automatic Updates (and Windows Update) access is blocked via Group Policy

Resolution
To make the Automatic Updates options configurable by the user (only for stand-alone systems), remove the restrictions 2 & 3 above.

Click Start, Run and type REGEDIT.EXE

Navigate to this location:

HKEY_LOCAL_MACHINE \ SOFTWARE \ Policies \ Microsoft \ Windows \ WindowsUpdate \ AU

In the right-pane, delete the two values AUOptions and NoAutoUpdate

Navigate to this location:

HKEY_CURRENT_USER \ SOFTWARE \ Microsoft \ Windows \ CurrentVersion \ Policies \ WindowsUpdate

In the right-pane, delete the value DisableWindowsUpdateAccess

Using the Group Policy Editor - for Windows XP Professional

Click Start, Run and type gpedit.msc

Navigate to the following location:

=> Computer Configuration
==> Administrative Templates
===> Windows Components
====> Windows Update

In the right-pane, double-click Configure Automatic Updates and set it to Not Configured

Then, navigate to this location:

=> User Configuration
==> Administrative Templates
===> Windows Components
====> Windows Update

In the right-pane, set Remove access to all Windows Update features to Not Configured