You are better off NOT doing any Windows updates until after the challenge or shut down BOINC until you finish all the updates. Quite a few of the updates require a reboot. And there are some that be corrupted if you are running CPU intensive apps.
Windows Update note:
Since the MS update site does not do a good job of installing all its updates in chronological order you can run into problems on a fresh install of XP. This has happened to me a number of times.
So whats the fix?? The very first update you should get is the "Windows Installer version 4.5". This is the Windows utility that the OS uses to install any software and many of the Windows updates require this version. You can DL from MS DL Center here.
Version Listing
Windows XP Professional/Windows Server 2003 - 64 bit: WindowsServer2003-KB942288-v4-x64.exe
Windows XP Professional/Windows Server 2003 - 32 bit: WindowsServer2003-KB942288-v4-x86.exe
Windows XP Home Edition - 32 bit: WindowsXP-KB942288-v3-x86.exe