What is happening is MandrakeUpdate is updating the software source "update_source".
in all ftp mirrors, Mandrake has some file named hdlist.cz. Its somthing to tell where everything is or somthing.
What I would do is go to Mandrake Media Manager and delete the medium "update_source". Then, run MandrakeUpdate again.
It should ask you to connect to the internet to get a list of mirrors. Say yes and make sure youre on the internet. When you see the mirror list, select one close by where you live. If it generates the same error as before, remove "update source" again and select a different mirror until it works.
Im using Mandrake 10.0 and I have to use a mirror in France because the us mirrors dont work.