Before we start I have already solved this and I am posting this here as a reminder, note to self and aid to the community.
Now I have found this error to occur when I've freshly installed windows 7 and the first load of updates start to come in, eventually I get the error code above and my updates are failing, furthermore any local program updates like steam, origin, adobe, java etc. also fail as a side effect and are also hints towards this issue. Below are the steps I took towards fixing this issue.
Step 1: Windows updates>change settings>Tick give me recommended updates the same way i receive important updates
Step 2: Windows Updates>Check for Updates (Note: the number of updates should have increased).
Step 3: Click install.
Step 4: Restart your PC through the start menu
Step 5: Repeat steps 2-4 until no more updates can successfully be installed (note: you will always have some unsuccessful installs, continue until none of the installs succeed).
Step 6: Click optional updates and install all updates under the Windows heading.
Step 7: Repeat steps 2-4 to bring your PC up to date
Steps 1-6 fixes the side effects, step 7 eventually removes the error from Windows Update