These are your red liners:
<![LOG[InstallUpdates failed, error 87d00703]LOG]!><time="08:12:40.981+300" date="06-19-2012" component="UpdatesDeploymentAgent" context="" type="3" thread="1968" file="updatesdeployment.cpp:190">
<![LOG[Failed to initiate installation of updates, error = 0x87d00703]LOG]!><time="08:12:40.981+300" date="06-19-2012" component="UpdatesDeploymentAgent" context="" type="3" thread="9520" file="sdkinterfaces.cpp:943">
<![LOG[Failed to create UpdatesDeployment, error 80070005]LOG]!><time="11:03:16.756+300" date="06-19-2012" component="UpdatesDeploymentAgent" context="" type="3" thread="4192" file="sdkinterfaces.cpp:814">
<![LOG[Failed to create UpdatesDeployment, error 80070005]LOG]!><time="11:03:47.482+300" date="06-19-2012" component="UpdatesDeploymentAgent" context="" type="3" thread="4192" file="sdkinterfaces.cpp:814">
What does windowsupdate.log say ?? Check the ports for wsus
try
1. Remove SUP role.
2. Uninstall WSUS including updates & metadata etc. Reboot server.
3. Install WSUS with recommended setting ( ports).
4. Configure SUP & synchronize updates using SCCM admin console