By default when Windows 7 downloads updates from Windows Update and you choose to install those updates, Windows first creates a new System Restore point before it installs the updates. The reason for doing this is so you'll be able to roll back your system to its pre-update state in case any of the installed updates cause problems for your system.
However, some organizations have an IT policy that requires that System Restore be disabled on all computers. One reason sometimes given for doing this because if a computer becomes infected with malware, any system restore points might also contain that malware. Another reason is that System Restore points can take up a lot of disk space, so turning it off frees up more disk space for users. A third reason is because if the user restores their computer to a state several weeks earlier, the computer's domain password can get out of sync with Active Directory which can cause the computer to dis-join from the domain and need to be re-joined.
Whatever the reason, if you disable System Restore functionality on your system, you won't be able to roll back your system after installing updates. But does disabling System Restore have any impact on the ability of Windows to download and install updates from Windows Update?
No, it doesn't. Updates will install just fine on a Windows system on which you have disabled System Restore. Just know what's at stake if you do this.
Mitch Tulloch is a seven-time recipient of the Microsoft Most Valuable Professional (MVP) award and widely recognized expert on Windows administration, deployment and virtualization. For more tips by Mitch you can follow him on Twitter or friend him on Facebook.