Here is what you have to do to fix it: Run the following commands in Powershell on the offending server If it says "Windows Update - True" Then that is your default source, no matter what your GPO says...
I have manually gone through the installed updates on one of the servers in question and verified that these "Not Applicable" updates are not installed.
All these servers are fresh installs and they are in an OU that prevents them from restarting themselves after an update install and I am the only one who manually restarts them.
I have verified that the machines are in the correct groups in AD and in WSUS.
I have verified in the registry on the affected machines that they are pointing to the WSUS server and it can be pinged. There is no firewall or port blocker or anything like that.
When we checked if the Windows Update Service was running, we found that it was running. In this situation, you can solve the problem by deleting all the currently downloaded updates and retrying.
Sometimes an update gets corrupted and then Windows gets confused and thinks the service is no longer running.
Next, press Enter and the Windows Services dialog will appear.
Now scroll down until you see the Windows Update service, right-click on it and choose Stop.
If you’re still having problems, make sure to check out our previous posts on removing and reinstalling all Windows Updates, fixing Windows Update Error Code 0x80072efe, and fixing Windows Update Error Code 8E5E03FA.
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Every other OS works fine, it is only the 2016 servers that have this problem.