You may see the following error and the download of packages you have set to install may fail, with the following error written to the Application log:
Event Type: Error
Event Source: Windows Server Update Services
Event Category: Synchronization
Event ID: 364
Content file download failed. Reason: Access is denied
This is due to lack of permissions for ‘NT AUTHORITY\NetworkService’ account. Check the file permissions on the root and the folder where update content is downloaded. With the WSUS RC1 release, NETWORK SERVICE needs Read access to the root of the drive, and also needs Modify to the \WsusContent directory. On Windows 2000 you can workaround by granting READ access to Everyone to the root of the drive.