Finally (after all these years) I got annoyed enough to track down why Internet Time wasn't working on all of my XP or Vista boxes.
Despite the Internet Time synch tab being there out of the box on the system clock, there is a manual step needed to enable it. The Windows Time service needed to back it up isn't registered by default (check the Administrative Tools service applet). So, at a DOS prompt, enter
Then in the Administrative Tools service applet manually start the Windows Time service.
Then and only then will the Update Now button work.
Searching for other mentions of the service registration, there appear to be some problem reports where the service is registered, but the time synch still fails. This is not a problem I personally have ever seen, but in those articles, the fix reported in these cases is
w32tm /unregister w32tm /unregister w32tm /register
where you have to ignore the errors from both the first two commands to de-register the service.