Can Microsoft determine geographic location of computer through the
computer connecting to Windows Updates?

Any computer connecting to another computer over the Internet has an
IP address associated with it.  Each IP address on the Internet is
associated with an Internet Service Provider.  Your provider assigns
one to your computer when you connect to them.  Often times you can
narrow down where an IP address is originating from in this way.  Your
"lost" computer may be connecting to a Microsoft Windows Update
server; hence, reviling its IP address.  But there are some
problems...

First of all sometimes that area in which an IP address's location can
be narrowed is limited to a continent due to the vast coverage of some
ISP's networks.  Satellite Internet would be a good example.  You
could pull an IP address from the same pool of addresses from anywhere
in the world.

Second, and perhaps more importantly, is the problem of Microsoft
being able to (much less willing to) identify a specific computer
connecting to its server.

It is the stated position of Microsoft that windows update does not
"collect" information about your computer.

http://www.microsoft.com/windowsME/support/bulletins/findingdrivers.asp

"Note:   The Windows Update site scans your system to see what you
have installed. It may ask you to download software onto your computer
to facilitate this process. The safety and privacy of your system
information is protected during this scan. None of this information is
sent to Microsoft or over the Internet."

This article is concerning Windows ME, but it is the same windows
update site for all versions of Windows.

To summarize, there is a chance that a computer's location could be at
least narrowed to some extent by connecting to a Windows Updater
server, but the larger problem lies in identifying "your" computer
from the Windows Update side.

Please let me know if this answers your question.

Thanks!

If you got on Microsoft's Local Live www.local.live.com there is a
feature to 'locate me'. They can do it through your IP address or by
installing software they can do it more accuratey.