This seems to be a problem for many people as of late, and for some reason it stems around the release of Service Pack 3. Apparently what's hanging in svchost is actually Windows Automatic Update, trying to download something, can't, retries and then becomes stuck in a loop. I'm looking for a fix and found something of a temp fix here. I haven't tried the provided workaround...
Im making some progress, I did the following.
net stop wuauserv
rmdir c:\windows\softwaredistribution /s
net start wuauserv
Now when going back to the windows update site it asked me to install the KB892130 (Windows Genuine Advantage Pack) which I did. After this, the site is asking me to install Service Pack 3 which I am now doing. So far, SVCHOST.exe / wuaueng.dll have not got stuck in a loop.