That's interesting. I've been using a group policy entry. That one not only blocks WU, but even manual attempts to update the driver. I'll have to try your method because it would be oh so handy to block WU while still allowing manual updates.
For sake of completeness, here is the procedure I use:
NOTE: Since this uses a group policy, you need Pro or better to use this.
IMPORTANT: This setting will prevent even a manual update of the driver. In order to allow manual installation of a driver, you will need to disable this policy first. Note that doing this will cause the hardware ID you specified to be lost (see details below) so you will need to add any blocked hardware IDs back to the policy when you enable it again. For this reason, make sure to save a copy of the hardware IDs before you disable the policy.
Open Group Policy editor by running gpedit.msc, and hit the Enter key. This will open Group Policy Editor on Windows Pro edition.
Go to Computer Configuration > Administrative Templates > System > Device Installation > Device Installation Restrictions.
Double-click on "Prevent installation of devices that match any of these device IDs".
Change the status to "Enabled".
If you wish, you can also select the "Also apply to matching devices that are already installed", which will prevent installation or update of already installed devices. That means that already installed devices that match the Hardware Id, will be retroactively uninstalled and not allowed to be installed for as long as the Policy is Enabled (active)!
Click on the "Show" button.
Add the device Hardware IDs for the device.
All device values (Hardware Ids) entered in this section, will not be updated neither by Windows Update nor manually by the user. Note that one hardware ID, per device, is enough, you don't need to add all the Hardware Ids listed in Device Manager.
Once done, Click ok.
NOTE: To obtain the hardware ID, open the device in Device Manager, select properties, go to the Details tab, select Hardware Ids. There may be more than one hardware ID. Generally the second ID is the one you want. It is a little less specific than the first ID omitting the revision number.
As an example, for one of my systems, the built-in CPU graphics shows these hardware IDs:
PCI\VEN_8086&DEV_4C8A&SUBSYS_86941043&REV_04
PCI\VEN_8086&DEV_4C8A&SUBSYS_86941043
PCI\VEN_8086&DEV_4C8A&CC_030000
PCI\VEN_8086&DEV_4C8A&CC_0300
I use the second ID in that list to block the graphics driver from being overwritten by Windows Update. It is the most specific HWID in the list that does not include a specific revision.
NOTE: This setting takes effect immediately. No reboot is required.