Wsus clients stopped updating
I also tried the setting Notify for download and notify for install in Windows 10 1607, and it worked as expected.
When new updates are available, the user will receive a systray message.
You can configure Active hours through Group Policy.
Note that you can only see the new policy after you update the ADMX templates with the latest version for Windows 10 in the Policy Definitions folder on your Windows Server or in the Central Store.
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If you apply this policy to a Windows 10 1607 machine, the corresponding configuration in the local settings app won't change.
However, according to my tests, restarts will then be scheduled corresponding to the Group Policy, and the Active hours configuration in the Windows 10 settings will be ignored.
The Advanced options no longer offer a drop down menu for changing the Automatic Updates setting: Windows Update) has all the options of previous Windows versions: Notify for download and notify for install, Auto download and notify for install, and Auto download and schedule the install.
The option, Never check for updates (not recommended), of previous Windows versions, can be configured by disabling the policy.