Did you notice that Microsoft had stopped Windows Updates recently? The reason is because of a conflict with one of its own software products.

The company recently delayed the release of Windows XP Service Pack 3 because of incompatibilities with its Dynamics Retail Management System program which could lead to data losses. Automatic updates to Windows Vista Service Pack 1 were also affected by the same issue.

Now Microsoft is resuming the updates using a filter to prevent machines running the retail system from receiving them.

A company statement read, “A fix for this issue is currently in testing at Microsoft and with customers, and we hope to make it publicly available this month. Until then, Microsoft is advising Microsoft Dynamics RMS customers to not install either service pack.”

The Microsoft Product Team Blog is discussing one of the Vista Service Pack 1 (SP1) prerequisite updates, the Servicing Stack Update (SSU) — KB937287 — which contains the SP1 installation program.

“Back in February, we posted about the release of a couple of prerequisites for Windows Vista Service Pack 1. While several million customers installed the updates successfully, you may have read that a few customers experienced an endless reboot cycle while installing one of the prerequisites: KB937287 …”

As posted last month on the Windows Vista blog, we suspended automatic distribution of the SSU while we investigated the problem. Over the past few weeks, we’ve learned a lot more about the problem and have taken steps to address the issue. Today, we’d like to let you know that we are resuming automatic distribution of the SSU tomorrow and provide more clarity on what happened. To clear up any concerns for those of you who have already installed the update: There is no problem with the files that make up the Servicing Stack Update (KB937287); the problem some customers encountered was with the installation process for the update.

If you have downloaded this update, you may like to read the whole article.

I would normally ignore such questions. But when the reply comes from as knowledgeable a source as Joe Wilcox over the eWeek’s Microsoft Watch I take notice.

Joe takes us through the computer history of his friend, a bookseller who loves Microsoft — until now :

Only the newness of the Vista computer and my friend’s confidence in Microsoft have kept him from moving full-time back to the XP system. He wants to believe. But like me, his faith stopped with Vista SP1. He didn’t have confidence to install the update without me around, and I would want to back up everything first. There has been too much trouble surrounding SP1.

I haven’t updated my wife’s laptop, either. A few weeks back, one of the two SP1 prerequisite updates fatally wounded the boot-up process. System Restore rolled back the update and revived Vista.

I have to say I’ve not had as much trouble with my system as either Joe Wilcox or his friend. But then I haven’t been given the option of SP1 yet.

Food for thought.

According to Ed Bott over at ZNet the case for Windows Vista Service Pack 1 just got a lot stronger.

“When SP1 ships sometime in early 2008, it will strip away one of Vista’s most annoying features and remove one of the most persistent objections to Vista’s adoption.”

Microsoft will remove the reduced functionality mode — the so-called “kill switch” — from the operating system, “restoring the Windows Genuine Advantage (WGA) program to its original role as a series of persistent but nonlethal notifications”.

WGA senior product manager Alex Kochis talking to reporters and analysts, said, “Based on customer feedback, we will not reduce user functionality on systems determined to be non-genuine”.

With SP1 installed, a Windows Vista system that fails validation, which Microsoft terms “non genuine”, will continue to work exactly as before, except for some minor annoyances. The desktop background will be black. If you change it, a scheduled task will paint it black again one hour later, and you’ll see a small “Activate Now” alert in the same location, which apparently you can ignore.

Sounds hairy, though.