You could try this workaround (from MS)
Several problems on the Windows Update site can be caused by outdated or mismatched site
software. To install updated software for Windows Update on all operating systems other than Windows 95 or Windows NT 4.0, please follow the instructions below.
For Windows 98 and Windows Millenium Edition:
download the controls from click here and
save them to your desktop. Extract the .cab file following the steps below:
1. Go to the desktop and right click the iuctl.cab file.
2. Click "Extract to."
3. Point to a known location (like the desktop) and click "OK."
4. Go to the location you selected and right click on the iuctl.inf file.
5. Click "Install."