Yup to be honest it appears a lot of issues posted here (I'd say a small majority) are from offline environments.
Cheers...

Never been a problem for me with both XP and Windows 7 Ultimate - But that because I do it a little differently. I manually update the drivers and whatnot instead of letting Windows do it. 
I do agree that up to date drivers are super important. Especially where the computer or it's components are newer than the install disk for the OS. Windows update will bring your machines drivers up to date. But I build my own and have all the latest drivers for that build stored on the data drives. In other words there's 2 ways to keep your computer running smoothly. Windows update might be the quickest and easiest for most, but for me it's a pain in the butt. 
 
One, it's a hassle to move the DAW to a location were it can go on line. All our internet is via a wireless G4 smart hub and my DAW only has a LAN port. 
Two, I live in a rural location and I pay $10 a GIG for bandwith. 
 
All I'm missing with not running the updates is 3 Gigs of security fixes and having to pay $30 for something that I don't need. This just happened to me with the office computer which I installed W8.1, it was only $90 but the updates cost me almost $40. 
 
So in that I agree with both of you that a lot of issues are fixed by keeping your drivers up to date. there is 2 ways to do this if your on the ball with your equipment.
And in the case of the OP he , like me, resolves his issues off line first.  

Actually, I have very few issues with my offline setup.  In fact, I can't remember a single issue that was related to being offline...including this one.  I keep my drivers up to date by downloading them to a second PC that I use for internet access.  I then copy the driver to a thumb drive and install it on the DAW.
 
I think this recent issue was caused by my MOTU interface not booting properly. 
 
I also think the Wave plugin "side by side" error was most likely just a red herring in this particular case.  I say that because I moved the USB dongle over several months ago and did not have any outward recording issues.

To add windows update is no good whatsoever for driver updates (go to third party sites for that), but it does improve performance, security and reliability for sure.

If Windows remains offline, and you have your drivers updated through another means, then really the thing that may bite you at some point would be the C++ run-time redistributable routines potentially lagging behind.
 
The above has bitten a few folks - software such as Sonar, from time to time builds in explicit requirements for the presence of particular levels of maintenance on some of these C++ routines.
 
So, just tuck that in the back part of your brain, for any future time you may see weird errors start popping up after installation of some software upgrade.  IF those things begin to happen, you may have gotten into one of the above situations, and you may then need to get your C++ run-time redistributable routines brought up to the current levels.
 
Best of luck to you, 
 
Bob Bone
 

And it's not just C++ that is the issue here, there are all sort of issues that could occur if you don't update windows with your software/drivers which may not be as visible as c++ errors are. Generally the latest software is tested on the latest build of an OS.

I guess I should have been more explicit - What I had intended to imply was that if weird errors began happening following some installation of an application, that bringing the C++ run-time routines up to speed would be done with the execution of Windows Update, which would then also apply other OS maintenance as well.
 
Lastly, when performing maintenance with Windows Update, I recommend running it until it comes back with an indication that there are no more updates to apply, as there are often 'nested' layers of things that get updated.  (When some updates are applied, performing another sweep to check for updates may uncover some patches to the just-applied patches, so I always suggest running over and over until it has found and applied all required maintenance).
 
I also review optional maintenance for potential additional updates I might choose to apply.  I generally do not use Windows to apply drivers to things like video cards and such - instead I check the manufacturer's web site for those.
 
Hope everything turns out OK, 
 
Bob Bone