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How do I configure automatic installation of updates?

NOTE: The following configuration assumes that users do not have Administrator privileges. To configure WSUS to install totally transparent to users, you will need to set the following policy settings:

Policy:
"Configure Automatic Updates" = Option #4, with a scheduled installation time consistent with most systems being powered on -- preferrably during non-working hours.

"Reschedule Automatic Updates scheduled installations" - ENABLED
    Forces installation of updates at power up if a machine is powered down during the scheduled installation cycle. Protects against systems that are routinely powered down during scheduled installation times, which would result in installations never taking place.

"No auto-restart for scheduled Automatic Updates installations" - ENABLED
    Ensures that users will not be forced to restart after completion of a scheduled installation if already logged in. Users will be prompted to restart.

"Re-prompt for restart with scheduled installations" - ENABLED (60 minutes)
    Reduces annoyance of restart prompts occurring every five minutes when "No auto-restart" has deferred restarting after a scheduled installation.

With these settings, installation of updates will normally occur during a scheduled installation cycle assigned during non-working hours. Systems that are logged off will be restarted (if necessary), and the installation will be 100% transparent to the users. Systems that are not logged off will still be installed, but the logged on user will be prompted every hour to restart the system.

Systems that are powered down during the missed scheduled install cycle will be installed upon power up.If the installation completes before the user logs onto the system, the system will auto-restart. If the user logs onto the system before the installation completes, then the user will be protected from a restart while logged in, but will receive a prompt every 60 minutes to restart the system.

If you have users with Administrator privileges, you should consider assigning a deadline to updates so that your users cannot defer the restart indefinitely. In such cases, I would think that a deadline set to 48-72 hours past the first scheduled installation window would be sufficient.

If you do not want your users to be inconvenienced by the power on install and restart process, you should set these policies:

"Reschedule Automatic Updates scheduled installations" - DISABLED
"No auto-restart for scheduled Automatic Updates installations" - DISABLED