Nonsence.
You might have lost the ability to download if it is now being blocked.
You might have lost the model list if it has been corrupt (which might be because it can no longer correct).
You have not actually lost all the models. They are still on your hard drive.
Do you have any refernce to MS update? A knowledge base number? A patch number? Anything so that I can read more.
My updates ran yesterday (they always seem to run Tuesday, but that is probably just me) and mine is still working.
It might just be that you have got caught by two of the problems that are in 1.0.2.x (or possibly you have not even upgraded to 102x and 101x stopped working on 31/3/2008).
There is a known problem with model list corruption on 102x.
There is a known problem with the downloader going into a loop on the same animation with 1021.
There is a known problem with 102x where new purchases can not be downloaded.