It is hard to beat any software solution that is made by the same vendor as the OS.
MSE's detection rates is on par with paid solutions and it is above average for detection of rootkits, which are the most problematic type of malware.
It is better than other free solutions because it doesn't require registration to install. Also, many free solutions periodically require that registration to be renewed.
It should automatically update twice a day by default. A setting must have been modified.
Unless you mean the warnings about doing quick scans?
MSE is a good free option, so is AVG's free offering however to say that it's hard to beat the software vendor of the OS with an AV product is stretching the truth beyond reason.
As far as raw detection based upon a huge database of known threats which include viruses, worms, etc., Kaspersky is actually on or at the very top, MSE nor any other free offering is close in terms of overall possible detection capability. Not a big deal on a consumer level machine but across a managed network, it can be big. Protection strategy is situation-based, not a "1 solution fits all".
However here's where it gets a little more complex, a lot of the viruses don't affect NT 5.x or NT 6.x kernels (Win2k-XP, Vista-Win7) however it's there to help deal with residuals that may still lay dormant on some site or email. Many web servers and proxies have the ability to detect and quarantine/clean viruses at their level, then you have some browsers which have the effect of sandboxing, then you have local protection on your computer. There's a lot of talk about how Windows get viruses but I haven't seen one since Win98SE so it's hard to say which product is working better since all scans turn up negative.
Users IMHO are the biggest threats beyond any virus or malware product because they make bad choices. For Windows they mess around with the UAC to completely disable it allowing things to happen without their knowing for example. On Win7 it's actually quite perfect, it's almost like how it works with OSX, not very intrusive at all. Even OSX can contract threats onto itself if the user either carelessly, foolishly or unknowingly does something to make it happen.
What every user should be using is a quality anti-Malware product, even OSX has anti-malware implemented, hidden inside silently by Apple. However for Windows, a quick app is Malwarebytes, another good one is Superantispyware, both are free.
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