SP1 & SP3 are: Service Pack 1 and, likewise, Service Pack 3.

For XP, the SPs run from SP1 through SP3. I would do as Jo is doing and hold off on updating #3. Opt out of automatic timing set for installation of that Pack as long as it's buggy.

The Service Packs contain program and system patches and/or fixes.

To find the Update settings:

Start Menu
Control Panel
Windows Update

On Vista, I've only encountered the need for SP1; SP2 is related to Office products, that I noticed. And, I've not come across a SP3 for VISTA - yet.