Eventually, I did a 'Erase Data' (setting all memory cells to '0') and completed the install, I was able to get to a stable state. 1st thing I did was save a 'System Restore point'. That done, I decided to do an online update for Windows OneCare again (this time I had the security of a System Restore point!). Update finished without any 'obvious' issue (I was still able to navigate around on my machine). What did happen though, is that my wireless connection would keep disappearing. I would be connected for a few minutes and then gone. Even the 'computer' icon from the tray would be gone. Trying to Repair would not show any issue with the connection...
Looked up online and found couple of related posts -
Here it gives a workaround of a known issue which has recently come to light -
http://social.microsoft.com/Forums/en-US/onecareupdate/thread/297455ff-0484-4dd6-9627-ca1b0e30b015
"...
Yes, it has been confirmed by Microsoft to be a problem affecting the Windows Security Center on Vista. I'm awaiting official word to post here, but the current workaround that is valid is to open the Windows Security Center and select "change the way security center alerts" you by disabling alerts. The warning shield in the system tray and popups will cease, but the yellow status in the Security Center will likely still remain. However, as I noted in my earlier reply, OneCare monitors its own status. So, as long as OneCare is in green, the system is protected.
..."
I tried this and at that moment, my wireless connection did come back on. Although a little later(after machine came back from standby mode), I lost connection again.
Little more looking around and I found another post - not directly related to my issue, though I was able to reconnect when I followed the instruction;
http://social.microsoft.com/Forums/en-US/onecarefirewall/thread/a63d56d1-6168-465f-83ea-b6919676d05b
"...
Open One Care firewall settings and uncheck "Automatically suspend all home or work locations when you are connected to any network in a public place".
..."
Connection hasnt been lost since then...if this doesnt work either, will post back on it...."
-Elf.
