Update chronology (sample scenario)

WSUS Server:
Perform Synchronization to download metadata only
Setting: Options > Update Files and Languages > Update Files >
Download update..only when..

Certain updates are automatically approved
Setting: Options > Automatic Approvals > ensure that intended rule is checked

Approved updates will be downloaded at time specified in BITS policy
Setting: gpedit.msc > Computer Configuration > Administrative Templates > Network > BITS > Maximum network bandwidth...
Source: http://wss-id.org/forums/t/5803.aspx

Windows client:
Check for available update(s) <-- only updates already downloaded by server ?
Setting: AU Detection Frequency and Configure Automatic Updates

Download the updates
Setting: Configure Automatic Updates

Install the updates
Setting: Configure Automatic Updates
If setting no. 4 is used, installation will be executed at scheduled time no matter a user is logged on or not

Another sample scenario (found on the Internet)
www.igt.ethz.ch/www/Corporation/Internal/admin/Public/HowTo/WSUS.htm