windows 7: Can I make it automatically download updates during one period and install them in another?
You can choose to download, download and install or do nothing with updates. You will need to go to your update settings and choose what behavior you desire.
OK; I've found the answer in group policy - run gpedit.msc, then Computer Configuration\Administrative Templates\Windows Components\Windows Update, then Configure Automatic Updates. A few more options than in the standard update config.
My take on the configuration (from XP, but I think it's the same in 7) is this.
Automatic downloads updates then installs them. The download starts at the time you set (well actually the check to see if there are updates starts then if you want to be picky).
Download updates but let me choose when to install them pulls down content when it can. My impression is that it looks for content when the computer is on but idle. When it finds something it downloads it. When it's finished downloading it pops up a message telling you that it's ready to be installed. If there's more than one update it seems to pull them all before telling you. You can't choose when it checks or downloads the content, but you can choose when it gets installed.
Notify me but don't automatically download or install them looks for content, again likely when the computer is on but idle. It informs you when it finds something. You can't choose when it checks, but you can choose when it downloads, which is useful if you have limited bandwidth and you don't want update downloads interfering with other stuff. The check itself doesn't use much bandwidth so you likely won't notice it.
Turn Off turns it off. You have to manually run Windows Update. This gives you complete control, but you are responsible for remembering to check.