Windows – Blocking downloads (But allow Windows Update) using Group Policy

The "not working the way they were designed" thing is a generic warning that occurs when you drag and drop in ADU&C, it's nothing to do with WSUS. You can avoid it by right-clicking and selecting "Move". I've never seen any negative impact from it anyway.

As others have said, just hunting down those WSUS policies and dealing with them in your preferred manner is the way to go. If I was you though I'd build a new WSUS box and point them at it instead.

You could use PowerShell to update group policy. Here's an example:

set-gpregistryvalue -name "WU" -key HKLM\Software\Policies\Microsoft\Windows\WindowsUpdate -ValueName "WUServer", "WUStatusServer" -type String -Value "http://wsus01.internal.local:8530"

And here's where you can read up more on the amazingness that is powershell:

http://technet.microsoft.com/en-us/library/ee461027.aspx

OR AN EVEN BETTER ANSWER:

Step 1: Setup Active Directory
Step 2: Join computers to Active Directory domain
Step 3: Configure group policy to point computers to WSUS server
Step 4: Profit