I've recently replaced Windows Server 2008 R2 RDS Servers with 2016 Servers and ran into this issue. It seems that the GPO option to "Allow Non Administrators To Receive Update Notifications" (Computer Policy) and "Turn off access to all Windows Update features" (User Policy) no longer works on Server 2016.
This leads to situations where regular users would be prompted to install updates now. They can do so and they can even reboot the server afterwards. This is not only annyoing as hell for everyone working on the server, it's also a security issue. Under no circumstance non-admin users should be able to reboot a Windows Server.
The only viable option I've found so far is to use the Computer Policy to block access to all Windows Update features. Since this is a computer policy, now Administrators aren't able to install updates, which is a useless configuration. Currently I've disabled auto-approvals on the WSUS server to prevent these issues, but it adds extra workload on the admin team to manually approve updates and schedule downtimes for the servers.
Win 2016 has been around for a while. I wonder if anyone has experienced this issue as well and managed to resolve it or find some middle ground.