Does automatic updates reboots Windows Server 2008 ?
By default, yes! It depends on the specific updates though. Some don't require a reboot, but many do.
This behavior is entirely configurable. You can change the Windows Updates settings through the control panel. If you're working with a Server Core installation, you'll have to do it from the command line. Server 2008 R2 Core has a sconfig utility that provides a series of menus to make this (and other basic configuration tasks) very easy, but Server 2008 RTM Core has a script that accepts parameters to make it...um...possible.
In NT 6.0, there are five possible values for the registry key
To use the scregedit script for this or other configuration tasks, you must CD to the directory where it is located:
To view the currently configured option:
To set an option:
...where "4" could be whichever option-value you choose to set.
Stop and restart the Windows Update service to put this change in effect:
At this point, you can just leave the machine to update itself on schedule, or you can force update detection like so:
I hope this helps!