Hi, Thomas;

The most likely cause is a proxy or similar item on your end stripping
out some of the critical information needed for the files to install.
These are known as the "Content-Range or Content-Length header"
information parts.  If those are stripped by your proxy, then BITS will
return the error you see.   Also, from what I'm reading, the Apache 1.3
proxy is known to show this behavior if the requested file is already in
the cache.

Thus the files appear to download correctly, but since the above header
information is denied to BITS, that part of the process returns that
error code.

A bit out of my depth here, but a couple of suggestions I found online:

a. Add the MS sites to the proxy Exception list:  microsoft.com,
windowsupdate.com, download.microsoft.com
b. Another suggestion I found was to check the proxy settings and look
for a switch to "Enable HTTP Byte-Range requests"

If the above doesn't help, hopefully someone who knows more about proxy
settings will chime in to assist.