Reset the security settings on the BITS service and see if it helps:
http://groups.google.com/groups?selm=O4yhAYjdEHA.996%40TK2MSFTNGP12.p...
(the "sc sdset bits ..." part in the link above)
Then, after the above, do the following:
Click Start >> Run >>
Type the follow command in the Open box.
"regsvr32.exe qmgr.dll" (w/o quotes)
Press Ok
Repeat the same for the following command:
regsvr32.exe qmgrprxy.dll
If that didn't help, try this:
Run this command line (from a command prompt of from Start/Run, it
reinstalls the BITS service (line will wrap in the newsreader!):
%SystemRoot%\System32\rundll32.exe setupapi,InstallHinfSection DefaultInstall
132 %SystemRoot%\inf\qmgr.inf
(it must be a space between DefaultInstall and 132)
When it asks for your OS CD-ROM to get some files, just point it to the
folder %windir%\System32 (%windir% is typically C:\Windows).
Then run the following commands:
regsvr32.exe qmgr.dll
regsvr32.exe qmgrprxy.dll
Do a reboot after this.