You can't install the XP updates because you have an invalid CD Key.
It sounds as though you have a program running that is acting as a server. As you don't know what program this is, i would install an anti-virus prog. As well as a firewall. A trojan is a possibility.
Go here: http://www.symantec.com/
Do a search of "port 80" and you will see what i mean.
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