Yeah, I had an idea you meant that. My apologies, I typically refer to Windows 2000 as NT5 when speaking with some the computer-nerds I know.
Windows Update for Windows 98 did work on my "virgin" installation of Windows 98 with IE6 installed about a month back now, until I allowed the ActiveX controls to run - then it send me through the endless redirections between v4 update and v6. Back in 2011, it did work - but Microsoft didn't have the full repertoire of updates - only about 30mb at that stage. I used the "Autopatcher" to bring it up-to-date, so its pretty stable now and runs GREAT! P4 @ 2.8GHz + 512mb of RAM + 256mb Graphics = Lots 'o Fun
So I'm not sure whether NT4 would work. It might be worth looking, just to see. I have diddled with NT4 a touch, and I'd imagine installed IE6 and trying it would be the best place to start.
After that, it would be interesting to see if Windows Update is trying V4 or V6. If it ends up in the endless redirection loop, you've got the answer...
HOWEVER, I wonder if you could back port the update by using something like KernelEx? That might work, although quite likely not (Using the "XP version" would be the closest bet).