There was a lot of discussion today on the Thin List about the issue that when a Microsoft Update is run on a terminal server while users are connected, when the update completes they will be presented with the prompt to reboot the server (or reboot later) but the choices will be greyed out and users will not be able to exit out of the window.
It was brought up that there is a group policy setting for this issue. One of them is in the SUS admin template which must be loaded (WUAU.adm)
The general consensus was that the following two group policies "should" resolve this issue:
Computer-> Admin Templates-> Windows Components-> Windows Update.
In particular, "Allow non-administrators to receive update notifications"
Computer Config-> Admin Templates-> Windows Components-> Windows UpdateSet
"No auto-restart for scheduled Automatic Updates installations" to Enabled
However after further discussion some claimed that this method did not always work.
So I guess what we have found is a real bugger of a bug.