PCs Get Update Error 80246002 From WSUS, all PCs in domain

I have a fresh install of Server 2016. I have WSUS installed on it as an offline WSUS server. I have a few systems connected to this WSUS server to update all my computers.

Both my Windows 10 machines and Server 2016 machines connected to this server fail to update with error 0x80246002. This is after they detect the updates they have to do; they download the file and then give me this error. I have tried to do a full WSUS reinstall, but still get the same error.

When I run the Windows update troubleshooter on the clients. I get one that is NOT FIXED.

"Potential Windows Update Database error detected"

I have stopped the Windows Update servers and Changed SoftwareDistribution to SoftwareDistributionOLD and restarted the service; the same issue persists. As much as I can tell this is issue is a mismatch between hashes on downloaded files. Not sure how I can test that or correct it.

Has anyone had this issue before?

UPDATE: Ran all the suggested fixes and I am still getting these errors on all the computers in the domain.

11832 11992 DownloadManager *FAILED* [80246002] Failed to postprocess the file: URL = 'http://xxxxx.xxxxx.xxxx:8530', Local Path = 'C:\WINDOWS\SoftwareDistribution\Download\388cc9a8175bea9582e317d3f93a3d5\windows10.0-lb4486553-x65.cab'
11832 11992 DownloadManager *FAILED* [80004001] Method failed [CAgentDownloadManager::CanRetryWithDifferentCDNForError:23965]
11832 11992 DownloadManager *FAILED* [80246002] Error occurred while downloading update 466B908E-25B0-4278-81EA-EED46C8170AD.202; notifying dependent calls.
11832 8140 Misc *FAILED* [80070003] Method failed [SusMoveOrCopyDirectoryContentHelperRecursive:1648]
11832 8140 Misc *FAILED* [80070003] Method failed [SusMoveOrCopyDirectoryContentsHelper:1728]

I had a similar problem recently and in my case, the WSUS server was not part of the domain. I configured the WSUS GPOs to point to the IP Address of the WSUs server, but aparrently, after scanning, the WUA on the clients gets a list of updates to download, with the download URIs provided by WSUS - which were using the WSUS hostname, instead of the IP address. So the domain computers were unable to find from were to get the updates. I created in DNS an entry for the WSUS hostname and after that, the updates started to download and install. I see that you said the files were downloaded in your case, however, also in my case the same error appeared, and the associated error message was mentioning a failure to install, not to download, when in fact the files were not downloading.

I would suggest to copy the URI of a file from the WSUS interface (File Information), then to try on a client with failures to copy the file using this URI inside a browser.