When setup restarts into GUI-mode, it is physically possible to invoke the advanced startup options and enter Safe mode.
When you invoke Safe mode, only services listed in one of the sub-keys of HKEY_LOCAL_MACHINE\System\CurrentControlSet\Control\SafeBoot are started, causing setup to fail.
When you finally receive the following message, restart and let setup continue, but NOT in Safe mode:
An error has been encountered that prevents Setup from continuing. Setup failed to install the product catalogs. This is a fatal error. The Setup logs will contain more information.