The only way it's a hardware issue is if your RAM or where you installed it to is hosed, which if either were hosed, you'd have a system that would be giving you trouble elsewhere. I guess the motherboard could be a problem, but really, all this is doing is just updating files. And is everything failing or just a few updates?
Well, let's try something else.
- Reinstall Windows, don't even connect it to the internet
- Create a restore point after reinstallation
- Install all drivers first.
- Using another computer, download SP1 (assuming it doesn't come with it) and any manual updates that it needs to actually get it to install
If manual updating to SP1 (again, assuming it's not an SP1 disk already) fails, then use that restore point before any drivers were installed and try again.