The update in question is KB977165, which addresses a vulnerability in the 32-bit Windows kernel that could allow elevation of privilege that was disclosed last month. The problem apparently affects mainly Windows XP 32-bit installations, but some users in the thread mention occurrences on Windows Server 2003, Vista and Windows 7.
Users can reportedly fix the issue simply by booting Windows from the installation disk that shipped with their PCs. However, not all manufacturers ship systems with a disc for re-installing the operating system, not to mention netbook users are out of luck since most don't have an optical drive. Microsoft says it is investigating the reports to determine the cause of the problems. In the meantime, if you've not yet installed this month's patches and are running XP, it might be wise to hold off until more details are available.