Fix: remove broken Windows 7 KB3004394 update
The update Microsoft had issued on December 10 can cause various problems. It can cause false UAC prompts, Catalyst driver installation fail, error 2147023113 for Windows Defender, the inability to install additional updates, and error 8000706f7 for Windows Diagnostic tool. Especially the inability to install additional updates could be a big problem. As suggested by Microsoft, you should remove the update.
You can remove the update by going to Control Panel > Programs > Programs and Features > View Installed Updates, right-clicking on KB3004394 and selecting Uninstall. This will require a restart.
You can also uninstall the update using the script provided by Microsoft or the Command Prompt
wusa /uninstall /kb:3004394 /quiet /forcerestart