Anyway, after a few problems with the initial install I went to install SP1 only for the upgrade to fail fairly early on, with the following in the setup log:

09:54: ProcessInstalls: installWSUS set.
09:54: AdjustWSUSSSL: found the wsusutil.exe at C:\Program Files\Update Services\Tools\wsusutil.exe
09:54: AdjustWSUSSSL: Launching C:\Program Files\Update Services\Tools\wsusutil.exe with arguments: ConfigureSsl MIOS3.immediacy.local
09:54: SetProgressScreen: Init WSUS Install progress.
09:54: statusUpdate: Resetting progress bar.
09:54: LaunchWSUS: Launching d:\temp\setup\i386\WSUSSetup.exe with arguments: /g /q DEFAULT_WEBSITE=0 PROGRESS_WINDOW_HANDLE=2818292
09:55: LaunchWSUS: Failed: Return Code 3604
09:55: LaunchWSUS: Check C:\Documents and Settings\dhope\Local Settings\Temp\1\SCEWsus for more information.
09:55: LaunchWSUS: Additional Logs may be avaiable at: C:\Program Files\Update Services\LogFiles

So, time to check the WSUSSetup.log file

2008-04-21 10:02:32  Success   MWUSSetup          Creating database backup...
2008-04-21 10:02:32  Error     MWUSSetup          ExecuteQuery: Failed to execute SQL query BACKUP DATABASE SUSDB to DISK=N'D:\WSUS\SUSDB.bak' (Error 0x80040E14)
2008-04-21 10:02:32  Error     MWUSSetup          ExecuteQueryGetNoResults: Failed to execute query BACKUP DATABASE SUSDB to DISK=N'%s' (Error 0x80040E14)
2008-04-21 10:02:32  Error     MWUSSetup          BackupDatabase: Failed to backup database (Error 0x80040E14)
2008-04-21 10:02:32  Error     MWUSSetup          CUpgradeDriver::PerformSetup: Failed to backup database (Error 0x80040E14)
2008-04-21 10:02:32  Error     MWUSSetup          CSetupDriver::LaunchSetup: Setup failed (Error 0x80040E14)
2008-04-21 10:02:32  Success   MWUSSetup          An error occurred while performing setup. Please refer to the error logs for details
2008-04-21 10:02:32  Error     MWUSSetup          DoInstall: Wsus setup failed (Error 0x80040E14)

Ahah! – What’s this, SCE SP1 seems to be trying to backup to a non existent location (D:\WSUS), simply creating the directory and giving it the relevant permissions sorted the problem and setup could then run.