Clients with windows server update services (WSUS)

I am trying to figure out how to setup a place to update computers to the latest update via server 2003. This would allow me to update computers with having to connect to Microsoft each time. My question is in order for a client to receive updates from a windows server, does the client have to be in a domain? In other words is it possible for a friend to come to my place and update the 100s if Microsoft updates on his/her laptop.

Any help would be great. (especially step by step)