Both explains and solves the problem. Encountered it multiple times reinstalling Windows 7...
This article shows you how to fix the "Checking for Updates" loop on Windows 7.
Why this problem occurs
Inside Windows Update, there is a small piece of software called an agent. The agent contacts Microsoft's servers and downloads any available updates.
In order to function properly, the agent on your computer must be the same version as the one on Microsoft's servers, otherwise your computer will not be able to communicate with the servers. Several months ago, Microsoft updated its servers, causing any Windows 7 machines with the old agent to fail when trying to connect. This incompatibility between computer and server causes Windows Update to get stuck.
Solution and more at:
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