This policy setting specifies whether Windows searches Windows Update for device drivers when no local drivers for a device are present.If you enable this policy setting Windows Update is not searched when a new device is installed.If you disable this policy setting Windows Update is always searched for drivers when no local drivers are present.If you do not configure this policy setting searching Windows Update is optional when installing a device.Also see "Turn off Windows Update device driver search prompt" in "Administrative Templates/System" which governs whether an administrator is prompted before searching Windows Update for device drivers if a driver is not found locally.Note: This policy setting is replaced by "Specify Driver Source Search Order" in "Administrative Templates/System/Device Installation" on newer versions of Windows.
System\Internet Communication Management\Internet Communication settings
Machine
Windows Server 2008 Windows Server 2003 Windows Vista and Windows XP SP2
HKLM\Software\Policies\Microsoft\Windows\DriverSearching!DontSearchWindowsUpdate
ICM.admx