Does keeping Windows 7 updated make anti-virus software useless?

I was thinking, given that I regularly keep Windows 7 updated through Windows Update,
doesn't this make having any anti-virus software useless. I may well be a naive user,
but it seems to me that if security concerns are found then any patches to the operating
system to close those security holes should solve the problem.

So, if my Windows 7 is up to date via Windows Updates, and I don't use an administrator account (a restricted account) do I still need an AntiVirus as surely I'd be protected.

Answer

Windows updates will not protect you from software you yourself ran. If you are tricked in to running a malicious program it can unleash its payload.

You also state "if I keep myself logged in as a regular user without administrator privileges" but if you get a UAC prompt from a program and type in administrator credentials it does not matter that you where a regular user.

Windows updates also does not protect you from bugs in other software like your web browser (if not using IE), so a virus could get in that way which a anti-virus would have blocked.

Lastly, even if the program never gets administrative privileges and does not use any exploits in windows there is still plenty bad it can do as a restricted user, a non elevated program can read almost all the files on your hard drive and send that information anywhere it wants. If you contained any valuable information on your hard drive the writer of the virus now has a copy of that info.