I've been happy to try out this app since it first came out the beginning of the year.  Its just ridiculous that the app no longer downloads updates because of a bug.

Here is the "permanent fix" found by a user, not Microsoft.  :)

http://communities.microsoft.com/newsgroups/previewFrame.asp?ICP=spyware&sLCID=US&sgroupURL=microsoft.private.security.spyware.announcements&sMessageID=%253CuPXTRaNhFHA.1388@TK2MSFTNGSA01.privatenews.microsoft.com%253E

Here is the old workaround I built:

How to force Microsoft Antispyware to download updates

1. Decide which File Downloader app you want to use.  The files are in a zip file and need to be extracted. The batch files are very simple, just downloading the 3 files that are needed for anti-spyware updates.
   1. Either download my FileDownload.Net version (which hasn't been tested very much) which will have its source code published shortly. This requires the .Net Framework 1.1 from Microsoft.  Its in Windows Update.
   2. Or use the File Downloader version built on the File Downloader from this site.  It is used by many programs and I have to say its seems trustworthy, but its source code isn't published.
2. Extract both files into your Microsoft Antispyware folder (ie, C:\Program Files\Microsoft AntiSpyware).
3. Rename the "forceMSASUpdate.bat.txt"  file to "forceMSASUpdate.bat" so that it will run as a batch file when double-clicked.
   • If you installed Microsoft Antispyware somewhere other than "C:\Program Files\Microsoft AntiSpyware", you need to edit the file before using it.  Simply replace this patch with your own.
4. Create a Scheduled Task for the bat file that runs as some fairly unprivileged user account on your computer. 
   • Create an account if you don't have one for tasks.  Mine is named tasks and is only a member of Users.
5. Modify the permissions for the Microsoft Antispyware folder to grant this "scheduled task user" full rights (Full Control) to this folder and all files.
6. Grant the "scheduled task user" the privilege to "Log on as a batch job" in the "Administrative Tools\Local Security Settings".
   • 
7. Run the scheduled task and then manually verify that the Microsoft Antispyware updater is updated.
   • 
8. Finally, go to bed knowing you have the latest anispyware updates.  :)