I reformatted a laptop with Windows XP SP3; updated drivers, completely ran Windows Update, and installed Firefox and Microsoft Office. Then I went to install Microsoft Security Essentials. It installed fine, but when it tried to update virus and spyware definitions, it got all the way to the end (“Installing…”) and then had a “Connection Failed” error.
It took a bit of searching but I finally found the fix: go into C:Windows — the Temp directory is missing! Create a new folder, name it “Temp”, and then update again and it will succeed.
I’m baffled as to what point in the process of clean installing this computer the Temp folder got deleted. I thought it was a standard folder, and obvious MSE thinks so too! This is definitely a squeaky clean computer, with all official software (nothing illegal), I got the CDs from Microsoft and I’m behind a NAT router so nothing unsolicited is coming in; I’m completely confident that the computer has no viruses or spyware which could have removed the Temp folder.
Anyway, I hope this helped you! If it did and you have a website or blog, please write a post about this (spread the word) and consider linking back to me so that hopefully this entry can rise to the top of search results.
Richard Carter 
thank you!!!
finally fixed!!
wewwwwwwwwwww
hey..i am also having the same prob with my pc (having xp sp3) when i click on update in mse…it shows connection failed…
And yes the TEmp folder was misin before bt after creating it…I m still facing this prob…i.e. connection failed.
I can access other sites..my widows firewall is also on…
i just dont kno the reason y is it showing so…
so i need ur help..
i hope u’ll help me..waiting for ur reply..
thankssssssss
Same problem here, but temp folder was already there. There’s more going on here……
Hmm… I would check that the Temp folder has full permissions to the currently logged in user (or all users). This is especially important on Windows 7 which seems, in some environments, to disallow write access to the temp folder to normal users and in some cases even local administrators (e.g. domain users with local admin privileges cannot write to the temp folder).