1 I used to have auto update turned off and manually review updates for installation myself at some later date.  Only once in many, many, years did I decide that no, I wouldn't install an update, so I went ahead and turned it on.  That would have been back in the days of Windows XP.  I've been letting windows update at will since, and I've only once had a significant error, where a patch was failing to install, and kept popping up notices about needing to reboot and refusing to shut down, but that machine was still entirely functional until I had the time to google the patch number and how to clean it up.  Once, a security patch did valid things that a bunch of games took offense to, but that was the fault of those games that were relying on a security hole, not Microsoft or Windows Update.  A couple of times reviewing the literature revealed that a security patch, wasn't, and I recall once that the advice was to remove that patch as you were better off with the original unpatched flaw, but my normal manually supervised process would have produced the exact same result.

2

My Acer NAS runs Windows Home Server 2003. Or I should say "ran". Now it doesn't run at all.

Last spring it got bricked by Windows Update. After installing patches, it hung during reboot. And it has never booted since. I eventually gave up and unplugged it.

That was where I kept my anime, and it all vanished into the bit bucket. I've redownloaded all the important stuff onto my other NAS, and I'm hoping that it doesn't die on me too.

3 That sounds like the NAS was just a ticking time bomb waiting to die on the next reboot.  I've lost a few "leave it in the closet and don't touch it for a year" machines that way, including an Acer WHS NAS like yours.  That one died to the point where I couldn't even get it to rebuild itself from the installation media.  My torrent ratio took a major hit rebuilding my collection after that, since of course the NAS was my main storage repository and I didn't happen to have backups for all 5tb of the data that was on it.  That said, servers and automatic updates don't mix, you're right. 

4 I wasn't using automatic update on that server. It died after I did a manual update.