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Event ID: 1001 Source: ServerStatusReports

Level
Description
A fatal error occurred either while synchronizing the Update Services computer groups with Group Policy or while moving the Unassigned Computers group. To see a detailed log, create a file called SyncSecurity. Log in %SBSProgramDir%\Support, and then run SyncSecurity.exe again. The error returned was: The Workstation service has not been started.
Comments
 
In my case, this event appeared after I created my own "friendly named" computer groups within WSUS 3.0, moved my computer accounts into those newly created groups, and deleted the default groups.
Re-creating the default groups, "Update Services Server Computers" and "Update Services Client Computers" resolved the issue for me.

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