Running Windows Updates!!!!

anything in:
the event logs on client and server?
the windowsupdate log?
did you see this:
Automatic Update Client fails to update using Windows Server Update Service with Error 0x80072efd
http://support.microsoft.com/default.aspx?scid=kb;en-us;555459

In the WSUS console you can configure the updates you want pushed to install automatically but not reboot or let users stop an automatic reboot, blah blah. The thing with WSUS is you have to first approve the updates then set WSUS to install approved updates. Approval doesn't automatically install the update. more admin work than it should be but thats MS. WSUS has Help thats pretty good.

Ghosted workstations doesn't have anything to do with the workings of WSUS.

In the WSUS console under computers are all 400 listed? If they aren't listed then they aren't configured to use WSUS.

Also, be sure each computer has an individual computer name or network ID. It's possible this wasn't done when ghosting; and can cause other problems as well.

All computers are named properly and appear on the WSUS server as well as in AD.

Here is the registry key for cloned machines

This can happen if the machines share the same ClientID. You can work around this by deleting the following registry keys and rebooting the clients:

HKLM\Software\Microsoft\Windows\CurrentVersion\Windowsupdate

Delete the following entries, if present:

? AccountDomainSID

? SusClientID

? PingID

Before you clone the OS image, consider using SysPrep ? reseal to make sure the SIDs are generated. Machines that are sysprepped will automatically get a new ClientID when they are first booted.

I think I remember reading somewhere that Win2000Pro's do NOT update automatically like XP does. The download works and it shows that Updates Are Ready To Install, but the user has to click on the update button to actually install.
Anyway, that's the way it works here. Most of my users have learned to click, but I still have to remind a couple of users to "click on the Windows Update".
It would be nice if Win2KPro's would update like XP's do but at least it's progress...I guess.

After 3 days of research and many trials and errors I have found part of the solution. I first found the Windows Update log to see what errors were being reported, thats when the research started. After researching every error I found the solutions, it was in my DCOM Configuration Properties. For some reason the Authetication setting was set to anonymous when it should have been set to Identify. Once I set it correctly it allowed me to atomate the install. Now I need to configure my SUS to make this all happen without any interaction from me or my users. I would like to thank all those who have helped me out. Your help has been greatly appreciated.