The permissions on directory %1 are incorrect.

The WSUS content directory must have specific accounts assigned and permission set for proper operation. This permission is set by WSUS server setup when it creates the directory, but it is possible that your security software might reset this permission. If this permission is not set, BITS downloads will also fail.

Possible resolutions include:

• The root folder on the drive where the WSUS content folder resides (for
  example, <SystemDrive>\WSUS\WSUSContent) must have Read permissions for either the Users account or the NT Authority\Network Service account. If this permission is not set, BITS downloads will fail.
• The WSUS content directory (usually <SystemDrive>\WSUS\WSUSContent) must have Full Control permission granted to the NT Authority\Network Service account.
• The NT Authority\Network Service account must have Full Control permissions to the following folders for the WSUS console to display the pages correctly:
  1. <windir>\Microsoft.NET\Framework\v2.0.XXXX\Temporary ASP.NET Files
  2. <windir>\Temp

Verify

Look for the corresponding error event.

1. Open a command window.
2. Type cd <WSUSInstallDir>\Tools
3. Type wsusutil checkhealth
4. Type eventvwr
5. Review Application log for the most recent events from
   source Windows Server Update Services and event id 10010.