Hey, just incase anyone else is having the same problem, TDSSKiller seems to have fixed the problem!
You can get it from the following link:http://support.kaspersky.com/downloads/utils/tdsskiller.zip
Also go to C:Windows>System32 and delete Catroot2 folder. If there are more Catroot2, for example Catroot2(862) then delete them too. When your computer restarts a new Catroot2 folder will be created, this is normal.
Save it to the desktop, extract it there then run the scan. Takes like 2 mins then will reboot the computer and Windows Update should work. It also has fixed the redirecting problem.
Running malwarebytes afterwards or before is also a good idea.
Edited by bhavikpatel219, 26 July 2010 - 12:57 PM.