Other than McAfee, you don't seem to have any obvious resource drags or Spyware in your system tray. The available hard drive space is good, but 1024MB (1GB) RAM is pretty low for Vista Premium. The Windows Aero desktop is incredibly memory intensive. Teamed with McAfee Security Center, I'm not surprised you're experiencing slowdown. I don't believe that should cause Windows Update to fail, but I'm not surprised by anything Vista does.
If you want to go this route, and see if it's a low memory issue causing your problems, there's a couple steps you should try
1) upgrade the system RAM to 2GB, at least. Gateway lists your system as using DDR2 667MHZ laptop RAM, so I took the liberty of searching that out for you at Newegg. Any of those should be compatible with your laptop.
http://www.newegg.com/Product/ProductList.aspx?Submit=ENE&N=2010260381+1309221136+1309121117&name=2GB+(2+x+1GB)
2) Uninstall McAfee. Go to Start - Control Panel - Programs and Features. Then select McAfee from the list, and click the button that says Uninstall. Follow the on-screen prompts to fully remove it from your system. For security, there are several options that are available online for free that use far less system resources than McAfee and work just as well (if not better). I like AVG, but other options include AVAST! and Trend-Micro PC-Cillin. You can get any of these at
http://www.download.com
3) This step may already be done, I forgot to ask this earlier. Vista should be current, with Service Pack 1 installed. The hotfixes in SP1 went a long way towards stabilizing Vista. To see if you have SP1 installed, go to Start - Control Panel - System. That info screen will say Service Pack 1 below where is says Microsoft Windows Vista if you have it. If it doesn't, you will want to download the full version (totally bypassing the not-functioning Windows Update) by clicking here:
http://www.microsoft.com/downloads/...6d-5ebb-413b-89c9-cb3d06d12674&DisplayLang=en
Try those steps above, see if things start running more smoothly. If not, It is time to reinstall the OS.