Note: If you are just looking for the final solution, skip to the last paragraph.
On my new Windows 7 64-bit installation, I started getting frequent corrupt downloads when files were downloaded via HTTP. First, I thought my download manager (Free Download Manager) was buggy. However, I got corrupt downloads when downloading via Firefox too. I noticed it happening even with third party web installers and even Windows update (with error “WindowsUpdate_80246002” “WindowsUpdate_dt000”). However, downloads via torrent client were fine. So were downloads over SSH Proxy Forwarded tunnel and downloads over HTTPS.