RSL: You're probably not infected then, since there are no traces of the worm on your PC. The reboot thing and the virus are seperate issues, that use the same Windows exploit. Random reboots does not imply the PC is infected, but being infected does imply the PC is unpatched, or was at the time of infection.

As for why the patch will not install, I'm not sure. Are you using the correct one for your OS? Can't think of much else right now.

Microsoft themselves admit that the firewall is a temporary solution to preventing getting infected and getting the reboot errors, just blocking the relevant port numbers is enough, but that doesn't fix the bug exploit in Windows itself.