I try to update IE and it says I need to install SP1 first. I try to install SP1 and it says the version I am using is later than SP1.
I've had similar problems with both Win98 (when I ran it) and XP when trying to update from MS website.
I have not installed sp2 yet on mine or the wifes xp yet, my son did and he has had a few problems with his pc., have not had any problems with IE update or any of the hotfixes yet.