I recently had a fresh Server 2016 installation that was stuck on “0% downloading” updates permanently. Note: We also have to go via a proxy server for our internet connection.
From the command line, if you run:
netsh winhttp show proxy
you will see the system proxy hasn’t been set.
If you have to go through a proxy server to get an internet connection, you will need to first set your (user) proxy server in Internet Explorer options menu, then run:
netsh winhttp set proxy source=ie
Now your Windows Update should work as expected again (you many need to restart the service first). Not quite sure why this has become “a thing” seeing as Server 2012 R2 never needed this, but hey-ho!
Alternatively, just run this single command:
set proxy proxy.mycompany.com:8080
And to configure the proxy bypass:
set proxy proxy.mycompany.com:8080 "<local>;bar"