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How do I distribute XP SP2 to 1000+ clients using WSUS?

Breaking up the computers into target groups is definitely the first step. However, the grouping methodology is also a function of how many machines are on the other side of WAN connections (and what the link speeds are), as well as how many machines are on the local LAN.

Assuming you did not use Express Installation Files (not recommended with 1000 clients, but useful for the sake of demonstrating the impact), and assuming all 1000 clients are on 100Mbit/sec LAN connections, your clients would try to move 1000 instances of the 270MB SP2 package in approximately 22 hours. The question is: Will they finish in 22 hours?

On a 100Mbit/sec LAN operating at 50% efficiency (50Mbit/sec throughput), you can move a 270MB file in about

    50Mb/sec == 6.25MB/sec = 375MB/min; 375MB/min / 270MB = .72 min.

three-quarters of a minute, or about 75 computers per hour, which is about 1650 computers in a 22 hour detection cycle.

So, the LAN-connected systems are not an issue. You could use policy to restrict the LAN bandwidth used by BITS on the WSUS server, if you wanted to reserve extra bandwidth for daily operations. If you restricted the WSUS server to using only 25% of the available bandwidth, then you'd find you could do about 825 computers in a 22 hour detection cycle.

If you were using Express Installation Files, the file transfers would be significantly smaller, and you could conceivably push the package to upwards of a few thousand clients in 22 hours at 50% bandwidth, and likely more than 1000 at 25% bandwidth.

What's of concern is the number of remote systems, and the bandwidth available between them and the WSUS server.

Assuming the same 270MB package is being sent across the wire, you'd have the following results (assuming 100% utilization on the WAN link):

    56kb/sec == 7KB/sec == 420KB/min == 25.2MB/hour; so a PC on a dialup might take several hours.
        - hint: Don't try to do SP2 across a dial-up connection. :-)

    128kb/sec == 16KB/sec == 960KB/min == 57.6MB/hour;

    270MB / 57.6MB/hour = 4.7 hours per PC
        - a small site of a dozen PCs on an ISDN or slow SDSL connection could be completed in a 60 hour weekend cycle (Fri 6pm to Mon 6am)

    256kb/sec == 32KB/sec == 1920KB/min == 115.2MB/hour;

    270MB / 115.2MB/hour = 2.33 hours per PC
        - about 9 PCs in a 22 hour cycle; about 25 PCs in a 60 hour weekend cycle (Fri 6pm to Mon 6am)

        - and, so, by extension, a T-1 circuit could update a hundred or so PCs in a weekend

But you really don't want to push the whole 270MB package down a WAN pipe, so for this scenario you really want to use Express Installation Files, which could potentially give you 3x the throughput (depending on the needs of each individual PC). So a 256kbit/sec pipe could upgrade 50 or more PCs over a weekend.

If you have less PCs and/or more bandwidth, you can use policy to restrict the amount of WAN bandwidth that will be used by BITS to transfer the packages.