Ran a wsusutil.exe reset command which ran for 896 hours. Eventually after getting fed up of waiting, installed the 2828185 patch.
Restarted the DB. Sucessfully sync'd the server.
Even though the files were in their relevant folders, WSUS was unable to download the files.
I have resorted to uninstalling the database and WSUS on the server completely and did a fresh install with a new db.
BITS error was resolved, but still seeing the error 10032. The server is failing to download some updates.