(Windows Update Services – Multiple Errors in Event Viewer) provides a solution for this type of problem (the steps the reconfigure WSUS).
I fixed this by enabling the iusr_serverx account in AD that was being used for anon authentication by this is IIS. (For added security, change the password then you have to change in IIS, Directory Security, Authentication & access control, as well.)
Also, another resolution:
I resolved my issue by removing the GUESTS account from the USER RIGHTS ASSIGNMENT:DENY ACCESS TO THIS COMPUTER FROM THE NETWORK.
Make sure that in IIS, the application "ServerSyncWebService" is using ASP.NET 2.0.x instead of ASP.NET 1.1.x. Change this on the "application" level or on the "default website" level depending on your environment.
From a newsgroup post: "Make sure the value for PortNumber under the "HKLM\SOFTWARE\Microsoft\Update Services\Server\Setup" key is set to the correct port (the one your WSUS site is on)".
See the link to "Microsoft event 12032 from source Windows Server Update Services" for additional information about this event.