For the updates that have been downloaded but not installed, I don't remember the folder Windows Updates downloads those to. I recall having to remove some because of borked updates. See if this will remove them:
Start ==> Programs ==> Accessories ==> System Tools ==> Disk Cleanup
It will check the disc for stuff to clean which will take a bit of time. When it's finished doing that, you'll get a window of options with two tabs on it.
On the Disc Cleanup Tab, which should be showing by default, you'll see several options. Before selecting anything to clean up, you need to make sure you don't have anything in the folder that you need to keep! So, working from the top down, click on each time then down below, click on View Files. That will show you the contents of the folder in question. If there's anything you want to keep, you can move it elsewhere temporarily making sure you keep a note of where you moved it from. Check the things you want cleaned. Do NOT choose Compress old files. In my case I also do NOT choose Office Setup Files. That way, if I need to fix the office installation, the files are already on the computer and I don't need to hunt up my installation disc. You can explore the second tab More Options just to see what's there. In any case, once you have chosen everything, click Okay. You'll get a confirmation window, click on Okay (or Yes) there as well. I think this will get rid of the downloaded but not installed updates. I'm not sure though.
Setting up Automatic Updates to manual:
The Windows Update service needs to be kept running and set at automatic, unless you really want to enable it every time you do updates. BITS should be set to Manual. You disable Automatic Updates this way on Windows XP:
Start ==> Control Panel ==> Security Center
Under Manage Security Settings, click on Automatic Updates. Another window will pop open in which you can select Turn Off Automatic Updates. Then click Apply.
To keep the crazy security shield from squawking that you've got Automatic Updates disabled, on the Windows Security window on the left hand side under Resources, the last item listed is "Change the way Security Center alerts me". Click on that. Another small window will open up. In that, remove the check mark by Automatic Updates and click okay. Then go ahead and close the Windows Security Center window.